Chapter 11 - Elias Neocleous & Co LLC...Cyprus from British colonial rule, on 11 February 1959,...

Chapter 11

The Commercial Laws of Cyprus

Achilleas C. Malliotis*

I. GENERAL SYSTEM OF LAW

§ 11:1 Description of system of law

§ 11:2 Constitutional law

§ 11:3 Statutory law

II. TRADERS AND NON-TRADERS

§ 11:4 Definition of trader

§ 11:5 Registration of traders

§ 11:6 Other requirements of traders

III. FOREIGN TRADE

§ 11:7 In general

§ 11:8 Regulations and restrictions

§ 11:9 Taxation of foreign trade

IV. FOREIGN DIRECT INVESTMENT

§ 11:10 In general


§ 11:12 Taxation of foreign direct investment

V. CONTRACTS

§ 11:13 Formation of contracts, offer and acceptance

§ 11:14 Capacity to contract

*B.Sc., M.A., Pg.D.L., Barrister-at-law, Licensed Insolvency Practitioner

ELIAS NEOCLEOUS & CO LLC

Advocates & Legal Consultants

5 Lemesou Avenue, 2nd floor

P.O. Box 26821, Nicosia, CY-1648, Cyprus.

Tel: +357-22110300

Fax: +357-22110001

E-mail: [email protected]

Web site: www.neo.law

11-1K 2019 Thomson Reuters, 2/2019

§ 11:15 Formal requirements of a contract

§ 11:16 —Acknowledgments

§ 11:17 —Notaries

§ 11:18 Performance of contracts

§ 11:19 Remedies for failure to perform

§ 11:20 Distinction between civil and commercial contracts

§ 11:21 Special requirements of sales contracts

VI. AGENCY AND COMMERCIAL REPRESENTATION

§ 11:22 Formation of agency contract

§ 11:23 Rights and duties of principal and agent

§ 11:24 Liability of principal for acts of agent

§ 11:25 Types of agency permitted in commercial relationships

§ 11:26 Termination of agency

VII. ASSIGNMENTS

§ 11:27 Assignments of contracts and rights thereunder

§ 11:28 Assignment of debts

VIII. BILLS OF EXCHANGE, PROMISSORY NOTESAND CHECKS

§ 11:29 Bills of exchange: formal requirements

§ 11:30 Promissory notes: formal requirements

§ 11:31 Checks: formal requirements

§ 11:32 Presentation and protest

§ 11:33 Endorsements

§ 11:34 Recourse and non-recourse

§ 11:35 Fraud and forgery

§ 11:36 Legal interest rates

IX. REAL ESTATE

§ 11:37 Forms of ownership

§ 11:38 Land registration and transfer of title

§ 11:39 Leases

§ 11:40 Zoning and land use planning

§ 11:41 Oil, gas, and mineral law

X. LIENS ON REAL PROPERTY

§ 11:42 Property subject to liens

§ 11:43 Creation of liens

§ 11:44 Perfection of liens

§ 11:45 Judicial liens

§ 11:46 Realization of property subject to lien

§ 11:47 Termination of liens

DIGEST OF COMMERCIAL LAWS OF THE WORLD

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XI. PLEDGES AND CHATTEL MORTGAGES

§ 11:48 In general

§ 11:49 Property subject to pledge

§ 11:50 Creation of pledge

§ 11:51 Perfection of pledge

§ 11:52 Realization of property subject to pledge

§ 11:53 Termination of pledge

XII. INTELLECTUAL PROPERTY

§ 11:54 Copyrights

§ 11:55 Trade marks

§ 11:56 Trade secrets

§ 11:57 Patents

XIII. ELECTRONIC COMMERCE

§ 11:58 Digital signatures / encryption policy

§ 11:59 Liability of on-line service providers for actions ofsubscribers

§ 11:60 Internet jurisdictional issues

§ 11:61 Licensing issues

§ 11:62 Restrictions on use of Internet

§ 11:63 Privacy and e-mail issues

XIV. COMPETITION AND ANTITRUST LAWS

§ 11:64 In general

XV. BUSINESS ORGANIZATIONS

§ 11:65 Corporations—Formation

§ 11:66 —Shareholders

§ 11:67 —Liability and bankruptcy

§ 11:68 —Management and representation

§ 11:69 —Profit and losses

§ 11:70 —Termination

§ 11:71 —Liability of officers and directors

§ 11:72 —Liability of shareholders

§ 11:73 General partnerships—Formation



§ 11:76 —Profit and losses

§ 11:77 —Termination

§ 11:78 —Liability of partners

§ 11:79 Limited partnerships—Formation



THE COMMERCIAL LAWS OF CYPRUS


§ 11:82 —Profit and losses§ 11:83 —Termination§ 11:84 —Liability of partners

XVI. CIVIL ACTIONS AND PROCEDURES

§ 11:85 General description of court system§ 11:86 Jurisdiction of courts§ 11:87 Parties to lawsuit§ 11:88 Depositions§ 11:89 Discovery§ 11:90 Statutes of limitations

XVII. RECOGNITION OF FOREIGN JUDGMENTS

§ 11:91 Enforceable judgments§ 11:92 Formal requirements of foreign judgment§ 11:93 Procedure for enforcement of foreign judgment

XVIII. WRITS OF EXECUTION

§ 11:94 Courts which have the power to issue writs of execution§ 11:95 Execution procedure

§ 11:96 Assets affected

§ 11:97 Assets exempt from execution

XIX. ATTACHMENTS

§ 11:98 Property subject to attachment

§ 11:99 Types of claims that are the basis for attachment

§ 11:100 Attachment procedure

XX. ARBITRATION

§ 11:101 Selection and appointment of arbitrators

§ 11:102 Enforcement of arbitral awards

§ 11:103 Appeal from awards

§ 11:104 International commercial arbitration

XXI. BANKRUPTCY AND CREDITORS’ RIGHTS

§ 11:105 In general

§ 11:106 Distinction between bankruptcy and composition

§ 11:107 Entities subject to bankruptcy

§ 11:108 Reorganization

§ 11:109 Court’s jurisdiction

§ 11:110 Petition for bankruptcy

§ 11:111 Procedural steps in bankruptcy

XXII. ONLINE RESOURCES

§ 11:112 Elias Neocleous & Co LLC

DIGEST OF COMMERCIAL LAWS OF THE WORLD

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§ 11:113 Other legal resources—Cyprus government websites

§ 11:114 —Other Cypriot websites containing useful information

§ 11:115 —Foreign websites containing information on Cyprus

Appendix 11A. Employment Contract

Appendix 11B. Instrument of Transfer

Appendix 11C. Power of Attorney

Appendix 11D. Sale Agreement

Appendix 11E. Sample Minutes and Resolution

KeyCiteL: Cases and other legal materials listed in KeyCite Scope can be researchedthrough the KeyCite service on WestlawL. Use KeyCite to check citations for form,parallel references, prior and later history, and comprehensive citator information,including citations to other decisions and secondary materials.

I. GENERAL SYSTEM OF LAW

§ 11:1 Description of system of law

The modern law of the Republic of Cyprus has its origins in a widevariety of different legal systems reflecting the island’s turbulenthistorical past prior to its gaining independence in 1960.

When the Franks conquered Cyprus in 1192, they brought withthem a feudal system of law which was not codified but based oncustom. The Franks discovered that a system of law already existedon the island and this was based on Greco-Roman customary lawwhich had been developed by the Byzantine Emperor Justinian. TheFranks adopted the existing law into their own feudal laws anddeveloped a system of laws called Assizes.

The Ottoman Turks, who conquered the island in the late 16thcentury, brought with them the Ottoman Laws and, in particular, theOttoman Penal Code, Civil Code and Land Code which covered mostof the land and penal laws. Family matters were dealt with by Islamiclaw with respect to the Muslim population of the island while theecclesiastical courts of the Greek Orthodox Church had supremeauthority over the Christian Greek population of the island.

The British, who effectively controlled Cyprus from the late 19thcentury, introduced English law to the island and, in particular, com-mon law rules and principles and rules of equity, as well as a numberof statutes which were in force in England at the time.

When Cyprus became independent in 1960, the Constitution of thenew Republic provided that the laws previously applicable shouldremain in force until repealed or amended by new laws of theRepublic. Since independence, myriad laws have been enacted, butthe common law still plays an important part in the administration ofjustice on the island, in particular in relation to commercial matters.

Under Article 1 of the Constitution of Cyprus, the new state is an

§ 11:1THE COMMERCIAL LAWS OF CYPRUS


independent and sovereign republic, with a presidential system ofgovernment. Although not explicitly stated, the Constitution adheresto a relatively rigorous separation of powers with respect to theauthority of the executive, legislative, and judicial branches ofgovernment.

§ 11:2 Constitutional law

The Constitution of the Republic of Cyprus is the product of theLondon and Zurich Agreements. In order to grant independence toCyprus from British colonial rule, on 11 February 1959, representa-tives from Greece and Turkey met in Zurich and reached an agree-ment for the granting of independence and self-determination to thepeople of Cyprus. On 19 February 1959, the Prime Ministers of theHellenic Republic, the Turkish Republic, the United Kingdom of GreatBritain and Northern Ireland and the leaders of the Greek-Cypriotand Turkish-Cypriot communities initialed the documents comprisingthe Zurich agreement.

On the basis of the above Agreements, a constitutional commissionwas appointed to draft the Constitution of Cyprus, composed ofrepresentatives of the two communities and of the Greek and Turkishgovernments. The outcome was the declaration of an independentCyprus Republic on 16 August 1960 and the creation of a constitutionwhich embodied the various provisions of the Zurich Agreement,certain aspects of the 1950 Greek Constitution and most of the provi-sions of the European Convention on Human Rights with respect tofundamental rights and civil liberties.

The Constitution of Cyprus cannot be said to be a true reflection ofthe sovereign will of the people of Cyprus. It is rather a “granted” con-stitution and the product of negotiation and compromise between theprevious colonial ruler and the governments of the two “motherlands”of the two resident ethnic communities.

The Constitution of Cyprus is also a “rigid” constitution because anumber of basic articles are considered to be of fundamentalimportance and cannot be deleted or amended under any circum-stances by the unicameral legislature. Amendments to the remainingarticles require a two-thirds majority from representatives of bothcommunities in the House of Representatives.

The Constitution does not fully respect the democratic principle ofmajority rule since it effectively gives the minority Turkish-Cypriotcommunity and the majority Greek-Cypriot community equal rights,despite the disparity in their numbers. The Turkish-Cypriot com-munity is overrepresented in all the organs of central governmentwith respect to its demographic weight. In a number of matters, suchas defense and the budget, it has an effective veto which may beexercised by the Vice-President of the Republic, who must be amember of the Turkish-Cypriot community.

§ 11:1 DIGEST OF COMMERCIAL LAWS OF THE WORLD

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Following the invasion of Cyprus by the armed forces of Turkey in1974 and the occupation of the northern part of the island by theTurks, which continues to the present day, the Constitution of the Re-public of Cyprus is only enforced “de facto” in the southern free part ofthe Republic. The partition of the island led to the forced separationof the two communities into two ethnically cleansed regions, a “Turk-ish” north and a “Greek” south. The partition of the island has meantthat many provisions of the Constitution which require the participa-tion of members of the Turkish Cypriot community cannot be enforcedin the free territory of the Republic.

The ongoing accession negotiations between Turkey and theEuropean Union may assist in the discovery of a lasting and peacefulsettlement of the political problem on the island and in the eventualre-unification of Cyprus. A settlement will almost certainly neces-sitate the adoption of a new Constitution to replace the 1960constitution.

§ 11:3 Statutory law

Under the Constitution, the legislative power of the Republic isexercised by the House of Representatives. All laws must be passed inthe House of Representatives by a simple majority vote of all themembers present. Laws passed by the legislature come into force onthe date they are published in the Official Gazette of the Republic, un-less other provision is made in the law itself.

Not all statutes are of equal force to each other. Statutes that arepassed by the legislature in order to ratify an international treaty,convention or agreement concluded under a decision of the Council ofMinisters (the organ vested by the Constitution with the exercise ofexecutive power) have superior force over any other domestic law.However, the supreme law is the Constitution and all statutes andlaws passed by the House of Representatives must be consistent withits provisions.

II. TRADERS AND NON-TRADERS

§ 11:4 Definition of trader

The term “trader” can generally be understood to indicate a personor entity that carries on some type of commercial business orenterprise. The nature of the business typically involves the sale ofgoods, the provision of services, or both. The term “trader” is not,however, commonly used or defined under Cyprus commercial law. Byway of example, the Sale of Goods Laws 1994–1999 use the terms“buyer” and “seller” respectively to refer to a person who purchases orwho agrees to purchase goods and a person who sells or who agrees tosell goods.



§ 11:5 Registration of traders

The type of business a trader carries out in the territory of the Re-public of Cyprus determines the nature of the legal and regulatoryframework under which the business will be conducted. As in the restof the EU, certain areas of business, such as banking and telecom-munications, are extensively regulated. For example, any trader thatwishes to conduct banking activities in Cyprus must first apply forauthorisation from the Central Bank of Cyprus and meet the require-ments of the Business of Credit Institutions Law of 1997 as amended,following which if the Central Bank is satisfied with the application,it shall make relevant recommendation to the European Central Bankwhich has ultimate decision-making responsibility with respect to theauthorisation of credit institutions in Cyprus. Similarly, a trader whowishes to conduct activities in the telecommunications market shouldfirst consult the Office of the Commissioner of Electronic Communica-tions and Postal Regulator to ascertain whether a license is requiredfrom the Regulator before commencing his business. Regulated sec-tors are the same as in the EU generally.

There are a number of registration requirements for different formsof business organization. The Registrar of Companies and OfficialReceiver is the government authority entrusted with the registrationof all business entities (either foreign or domestic) that carry on busi-ness in the territory of Cyprus. For example, partnerships andcorporations must register by filing certain documents with the Regis-trar, which are accessible to the public, pertaining to, among otherthings, the entity’s name, place of business, ownership andmanagement. This information needs to be updated whenever changesoccur. Sole traders or sole proprietors must have their business nameapproved and registered by the Registrar.

Traders may also be required to register with the local authority ormunicipality in which their place of business is situated.

Traders also must be registered with the Tax Department of theMinistry of Finance for income tax and VAT. VAT, being a form ofretail or sales tax, is charged by all traders with annual turnover inexcess of €15,600 and included in the prices of the taxable goods andservices provided by them. Traders must collect the VAT on theproducts or services they sell and then remit the money collected tothe VAT Department. Furthermore, traders must pay social insurancefor themselves and for their employees through payroll deductions tothe Department of Social Insurance of the Ministry of Labor andSocial Insurance.

§ 11:6 Other requirements of traders

There are a number of statutes and regulations that exist for thepurpose of consumer protection. For example, the Sale of Goods Lawof 1994–1999 implies a number of conditions in contracts for sale of


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goods, including conditions that the goods in question should be of anacceptable quality, should be fit for the purpose for which they are be-ing purchased, should correspond to their sale description and thatthe buyer shall enjoy the goods free of any encumbrances with respectto title. Other important consumer protection laws include laws thatdeal with issues such as onerous terms in consumer contracts,timeshare leasing contracts, distance selling contracts and consumercredit contracts.

There are a number of laws and regulations of an industry specificnature designed to protect consumers from loss or unfair treatment(e.g. concerning the travel industry, the insurance industry, et cetera).There are also myriad other laws and regulations which imposecertain minimum standards or requirements, in particular relating tofoodstuffs and pharmaceutical products, as well as product labelingrequirements. These laws and regulations are all in line withEuropean norms and it is advisable to carefully research them beforeundertaking the sale or distribution of products in Cyprus.

III. FOREIGN TRADE

§ 11:7 In general

Foreign trade and access to international markets are of the utmostimportance to Cyprus due to the small size of its domestic market andthe open nature of its economy. As a result, foreign trade hascontributed significantly to the economic growth of the island. In2017, the value of Cyprus’s foreign trade was approximately EUR8,228 million.

Cyprus’s main imports are raw materials, consumer goods,transport equipment, capital goods, fuels and lubricants. More than59% of these imports originate from the EU. Other significant tradingpartners include the Russian Federation, the United States, China,Japan, Taiwan, South Korea, Israel, and the neighboring Arabcountries.

Cyprus’s principal exports are manufactured goods and (processedor raw) agricultural products. Exports of manufactured goods includepharmaceuticals, clothing, cement, tobacco products, paper products,plastics, and furniture. Exports of agricultural products includecheese, wines, fruit and vegetable juices, citrus fruit and potatoes.The EU is the most important market for Cyprus’s exports, account-ing for 37% of total exports in 2017. Other important import marketsare the Arab countries, countries of Eastern Europe, the RussianFederation, Israel, and the United States.


The main body of legislation that currently deals with aspects offoreign trade is the Customs Code Law of 2004. Under the Law, the



importation and exportation of certain goods is prohibited orrestricted.

Restrictions usually refer to the need for securing permits or licen-ses or inspections from relevant government authorities. The aim ofthese restrictions and prohibitions is to safeguard social ethics, publicorder and security, public health, the health of animals and plant lifeand the island’s cultural heritage. The following is a non-exhaustivelist of items or goods whose importation is prohibited:

1. Goods not bearing the mark “CE,” where this is required;2. Narcotic drugs and other controlled substances;3. Obscene matters and objects (e.g. contained in DVDs, CDs,

cassettes, films, publications, etc.);4. Flick-knives and double-edged knives;5. Counterfeit or pirated goods which infringe copyright and intel-

lectual property rights;6. Nuclear, chemical, toxic and biological weapons and related

substances;7. Counterfeit currency;8. Handguns and rifles, apart from those used for recreational

purposes, explosive military devices and launchers, automaticguns, ammunition and other items described in Appendix 1 ofthe Firearms Law (Law 113(I) of 2004);

9. Items used for illegal hunting and trapping of wild birds andprey; and

10. Goods originating from countries under an embargo imposedby the United Nations Security Council or by the EuropeanUnion.

The following is a non-exhaustive list of items or goods whoseimportation is restricted and requires a permit prior to their importa-tion into Cyprus:

1. Hunting rifles, air-rifles, sporting pistols, and archery acces-sories;

2. Cinematograph films;3. Communications transceivers (other than walkie-talkies,

mobile phones and pagers);4. Explosives and similar substances;5. Flowers and plants;6. Biocides;7. Gold bullion, gold and silver coins, uncut diamonds and pre-

cious metals;8. Handcuffs;9. Meat, fish, cheese and honey products; and/or10. Wild fauna and flora.

The following is a non-exhaustive list of items whose exportation isprohibited:


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1. All items whose importation is prohibited; and/or2. Items of military use mentioned in Defence (Exportation of

Goods) Order of 1999.

The following items require an export license and therefore theirexportation is restricted:

1. Antiquities;2. Materials that may be used for the production of weapons of

mass destruction; and3. Wild fauna or flora threatened with extinction.

§ 11:9 Taxation of foreign trade

As of 1 May 2004, the date on which the island joined the EU,Cyprus applies the EU’s Common Customs Tariff on agricultural andindustrial products originating from non-EU countries. Due to its ac-cession to the EU, Cyprus has eliminated any remaining tariffs orquotas which may have applied to EU imports prior to accession.

The application of favorable preferential tariff measures on goodsimported from third countries provided for in bilateral trade agree-ments between the EU and these countries depends on whether theprerequisites of the rules of origin that are provided for in these agree-ments or in the corresponding implementing provisions of theEuropean Union’s Customs Code are met. The non-preferential originof goods is related to the application of the Common Customs Tariffand the application of EU trade policy measures.

IV. FOREIGN DIRECT INVESTMENT

§ 11:10 In general

Cyprus has a declared policy of encouraging foreign investmentwhich is reflected in various laws, regulations, international conven-tions and treaties concluded by the Republic. A number of substantialconcessions and incentives coupled with Cyprus’s strategic geographi-cal location, excellent commercial infrastructure, political stabilityand high standard of living are among the factors which havecontributed towards the development of Cyprus as a notable interna-tional business center.

The commercial infrastructure of Cyprus is well developed. It offersa good environment with respectable and pleasant working conditionscombined with low operating costs and living expenses. Not only arethere many well-qualified lawyers who are experienced in companylaw and tax planning but also all the major international accountingfirms are represented in Cyprus, as well as many engineering, insur-ance and trust companies. Furthermore, there is an ample supply ofuniversity graduates who are available to work in all sectors of theeconomy.




Foreign investment in Cyprus has been fully liberalized since acces-sion to the EU in 2004, and there are no restrictions other than inregulated sectors such as banking and financial services, tertiaryeducation, public utilities, media, and airlines.

§ 11:12 Taxation of foreign direct investment

As this is a large and complex field, a detailed analysis of taxationof foreign direct investment is not feasible in a publication of thisnature, and potential investors are strongly advised to obtain detailed,specific advice before making any commitments. The following briefanalysis of existing tax rules concerning Cypriot holding companiesshould provide a satisfactory initial understanding of the generalprinciples of taxation relating to foreign direct investment in Cyprus.

The model of the Cypriot holding company is that of an ordinarycompany which, besides having shares in Cypriot or foreign companies,may also be engaged in other commercial activities such as trading,manufacturing or financing.

The taxation regime which applies to these companies is three-fold.It consists of the Income Tax Law, the Special Contribution for theDefence of the Republic Law, and any applicable double taxationtreaties.

The business profits of a Cypriot holding company are subject to acorporation tax of 12.5%. Dividends are exempt from income tax;instead, a 17% special defense contribution tax is payable on the divi-dend income of companies resident in Cyprus with a participationexemption being available for domestic and foreign dividends. Theseexemptions are subject to anti-abuse rules regarding hybridinstruments.

The international participation exemption is provided by domesticlaw and grants relief from international double taxation by exemptingforeign dividends received by Cypriot companies from any taxation,with no minimum holding requirement. The legislation also exemptsfrom taxation any dividends that the Cypriot holding company maypay to its parent company. It should be noted that tax law does notdistinguish between company shareholdings in EU and non-EUcountries.

Individuals are liable to special defense contribution only if they areboth resident and domiciled in Cyprus. It should be noted that theabove tax regime only applies to holding companies that can be definedas resident in Cyprus. Under the residence rules for companies,management and control is the key test and not the mere fact ofincorporation in Cyprus.

Shareholders of Cypriot companies who are not residents of Cyprusare not subject to the special defense contribution tax and therefore


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dividends payable by a Cypriot-resident company to its foreignshareholders (whether a company or individual) will not be subject towithholding taxes in Cyprus. This is in marked contrast to other taxregimes in other EU countries in respect of dividends paid within theEU where withholding taxes are normally levied unless the EUparent/subsidiary directive requirements are fulfilled or a double taxtreaty applies to dividends paid to a non-EU shareholder.

In relation to the issue of double taxation, the Income Tax Lawprovides relief from double taxation in relation to income tax and anytax of a similar character imposed by laws of a foreign country. TheLaw distinguishes between situations where there is a double taxtreaty in place between Cyprus and another country and where nosuch treaty exists. All the double-taxation treaties which apply toCyprus provide relief from double-taxation by applying the creditmethod regarding the taxation of dividends and interest. It should ofcourse be noted that EU law prevails over the provisions of bilateraltax treaties, which cannot be used to justify its violation. Where notreaty exists, relief against double taxation may be granted unilater-ally at the discretion of the Commissioner for Taxes.

V. CONTRACTS

§ 11:13 Formation of contracts, offer and acceptance

The principles of contract law follow English common law. In orderto form a contract, it is necessary to establish that there has been anagreement between the parties. It must be shown that an offer wasmade by one party and that the offer was accepted by another partyand, therefore, that legal relations were intended.

An offer is an undertaking by the offeror that he will be bound incontract by the offer if there is a proper acceptance of it, provided thatthe offeree is aware of the offer. An offer may be made to a specificperson or to any member of a group of persons or, in the case of a uni-lateral contract, to the world at large. However, a mere invitation totreat or a declaration of intent are not considered to be an offer.

An offer does not continue indefinitely and may come to an end inone of the following ways:

1. by acceptance of the offer;2. by revocation or withdrawal of the offer prior to acceptance;3. by the expiration of a time limit set by the offeror for accep-

tance of the offer;4. if the offeror dies prior to acceptance;5. if a counter-offer is made; and6. if there is a failure to meet the conditions of an offer.

The acceptance takes place while the offer is still open and must beunqualified and absolute. Acceptance completes the contract and the



place where the acceptance is made is considered to be the place ofthe contract. Acceptance may be made orally or in writing or may beimplied by conduct. The offeror may stipulate a method of acceptanceand, if so, a contract will only arise if the prescribed method isfollowed. However, the offeror may waive his rights to have the accep-tance communicated by him in the specified way and agree to analternative method. The rule is that acceptance is only effective ifcommunicated but there are a few exceptions, such as in the case ofunilateral contracts or where the “postal rule” applies.

§ 11:14 Capacity to contract

To create a valid, binding and enforceable contract, the contractingparties must have capacity in law to contract. There exists a generalpresumption that everyone is capable of entering into contracts andthat these contracts are enforceable against them. However, somegroups of persons have certain disabilities in this regard.

According to Cypriot contract law, persons who have not reachedthe age of 18 years are considered to be minors with limited capacityto enter into contracts and therefore such contracts are deemed to bevoid in most cases. This disability exists to protect minors from theconsequences of their actions. Consequently, the law will sometimespenalize those who enter into contracts with minors.

The law provides for two exceptions to the above rule, namelycontracts for necessities and contracts for the minor’s benefit. Necessi-ties may be defined as goods suitable to the condition in life of theminor and to his actual requirements at the time of sale and delivery.Food, clothing, lodging, educational books, medical attention and legaladvice are some examples of necessities. Contracts for the minor’sbenefit include contracts of employment, of apprenticeship, of serviceand for education. However, if a contract’s terms are unduly onerouson the minor, despite being for the minor’s benefit, it may not beenforced.

Contracts made by persons of unsound mind are valid but if theother party is aware of the person’s disability then the contract isvoidable at the option of the insane person. However, an insane personcan make a valid contract during a period of lucidity even if the otherparty is aware of his disability.

§ 11:15 Formal requirements of a contract

The Contracts Law states that a commercial contract may be madeorally or be partly written and partly oral or be entirely in writing oreven be implied by the conduct of the contracting parties. As a matterof good commercial practice, most contracts tend to be in writing.Furthermore, the courts will not order specific performance of acontract that is not in writing. In some instances, the Law requiresthat certain contracts must be in writing in order to be valid and


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enforceable. The following contracts are examples of the above require-ment and must be in writing:

1. An agreement made without consideration on account of natu-ral love and affection between parties standing in near relationto each other;

2. A promise to pay a debt that is statute-barred at the time is en-forceable only if expressed in writing and signed by the party tobe charged with it;

3. A contract relating to the lease of immovable property for aterm exceeding one year;

4. A contract relating to obligations incurred in consideration to apromise of marriage;

5. A bond in customary form must be in writing and be signed bythe promisor in the presence of two witnesses;

6. A pledge of securities as security for payment of a debt or per-formance of a promise must be in writing and signed by thepawnor in the presence of two witnesses; and

7. Commercial agency agreements.

§ 11:16 Formal requirements of a contract—Acknowledgments

Generally speaking, most commercial contracts do not require anyacknowledgments or witnessing in any form. However, contractingparties may provide for acknowledgments in the commercial agree-ment subject to prior agreement.

§ 11:17 Formal requirements of a contract—Notaries

There is no general requirement for commercial agreements to havea notary sign and/or seal them. However, in some cases the Law orgood commercial practice requires that certain documents have a no-tary sign and seal them. Good examples of this are powers of attorneyand certain documents that have to be deposited with any publicauthority.

§ 11:18 Performance of contracts

It may be stated that a contract may be discharged by performancewhen the contracting parties have fulfilled their obligations under thecontract.

The mode or method of performance is a question of the properconstruction of the contract. If the contract does not specify the meansby which it may be performed, the appropriate means will depend onthe implied intentions of the parties which will be concluded from thenature and all the surrounding circumstances of the contract.

As a general rule, it is the case that a party to a contract is notrequired to request or demand performance and the promisor must



fulfill his obligations without being asked to do so. Such a request isrequired only where there is an express stipulation in the contract tosuch effect or the nature of the contract suggests an implied conditionrequiring a request.

As regards the issue of the date or time of performance, it is thecase in common law that in the absence of a contrary term in thecontract, performance of the contract is required at the exact datestipulated in the parties’ agreement. Failure to perform on a specifieddate gives the aggrieved party the right to claim for breach of contract.If no precise date is stipulated, the law implies an undertaking thatthe contract shall be performed within a reasonable time taking intoaccount all the circumstances of the case.

§ 11:19 Remedies for failure to perform

A failure to perform a contract may constitute a breach of contractand may provide the aggrieved party with one or more of the follow-ing remedies:

1. A right of action for damages;2. A right of action for a quantum meruit;3. A right to sue for specific performance or an injunction;4. A right to claim rescission of the contract; and/or5. A refusal of further performance of the contract by the aggrieved

party.

§ 11:20 Distinction between civil and commercial contracts

Cyprus law does not create distinctions between civil and com-mercial contracts.

§ 11:21 Special requirements of sales contracts

A contract for the sale of goods concerns the transfer of the owner-ship of the goods sold from the seller to the buyer and is governed bythe Sale of Goods Law. The formation of the contract of sale is likethat of any other contract and adopts the same principles. The Sale ofGoods Law is important in that it implies certain requirements in theform of implied conditions in the sales contract. Specifically, the lawimplies the following conditions in a contract of sale:

1. The seller has the right to sell the goods in question;2. If the contract is for the sale of goods by description, the goods

conform with the description stated;3. Where the seller is made aware by the buyer, expressly or

impliedly, of the particular purpose for which the goods are be-ing bought, there is an implied condition that the goods sup-plied under the contract shall be fit for that purpose exceptunder the circumstances that it is unreasonable for the buyer torely on the seller’s skill and judgment;


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4. The goods sold are of merchantable quality;5. Where goods are sold by sample, that the bulk corresponds with

the sample in quality, that the buyer will be able to comparethe bulk with the sample, and that the goods are free of defectsthat would render them unmerchantable; and/or

6. The goods are free from any encumbrances in favor of any thirdparty unknown to the buyer prior to the making of the contract.

The Sale of Goods Law provides certain remedies to an unpaid sellerof goods. These remedies include the following:

1. A lien on the goods for their price while they are in the seller’spossession;

2. A right of stoppage of the goods while they are in transit in caseof insolvency of the buyer;

3. A right to re-sell the goods to minimize his loss; and4. A general right to sue for damages for non-acceptance of the

goods.

In the event that the seller wrongfully neglects or refuses to deliverthe goods to the buyer, the buyer may bring an action for damages fornon-delivery or for delay in delivery.

The buyer may also seek a court order for specific performance.

VI. AGENCY AND COMMERCIAL REPRESENTATION

§ 11:22 Formation of agency contract

An agency agreement may be created in any of the following threeways:

1. Express appointment;2. Implication of law from the conduct or situation of the parties

or from the necessity of the case; and/or3. Subsequent ratification by the principal.

The actual relationship of the parties is determined by all the cir-cumstances of each case and not merely from the use of the word“agent” or “agency” in an agreement. The relationship of agent andprincipal can only be established through the consent of the contract-ing parties. It should be noted that the Regulation of Relations be-tween Commercial Agents and Principals Law of 1992 (“the 1992Law”) requires that all commercial agency agreements must be madein writing.

§ 11:23 Rights and duties of principal and agent

During the course of the agency agreement a commercial agentmust act in accordance with the law and with good faith with respectto the principal and must generally have regard for the principal’sbest interests. According to the 1992 Law, among other things, a com-mercial agent has the following duties:



1. To exert his best endeavors while negotiating or concludingcommercial transactions that are assigned to him;

2. To communicate to the principal any relevant information thathe may acquire; and

3. To conform or comply with all reasonable instructions issued bythe principal.

A principal is obliged to act lawfully and in good faith as regardshis relations with a commercial agent. According to the 1992 Law,among other things, every principal has the following duties:

1. To provide the commercial agent with all the required documen-tation with respect to the goods in question;

2. To provide the commercial agent with all the necessary infor-mation required for the execution of the agency agreement and,in particular, to inform the agent promptly of any expectedreduction in the volume of commercial transactions below thelevel that the agent would have expected; and

3. To inform the agent within a reasonable timeframe of anyconcluded or rejected commercial transaction as well as thenon-execution of a commercial transaction in which the agenthad an active involvement.

§ 11:24 Liability of principal for acts of agent

An agent appointed under a contract must act in accordance withthe terms of that contract and not exceed his authority. The authorityof an agent may be actual or apparent. Actual authority is the author-ity which the principal has given the agent wholly or in part by meansof words or writing or is regarded by the law as having been given tohim because of the dealings of the two parties and their relationship.Apparent authority involves the assumption that there is no authorityat all. Under this doctrine, where a principal represents that anotherperson has authority, the principal may be bound as against a thirdparty by the acts of that person within the authority which that personappears to have despite the fact that he has given that person no suchauthority to so act.

Contracts entered into through an agent and obligations arisingfrom acts done by an agent may be enforced in the same manner andhave the same legal consequences as if the contracts had been enteredinto and the acts done by the principal in person. If an agent exceedshis authority, the principal will then have the option of affirming orrejecting the unauthorized act. However, if a principal acts or conductshis business so as to lead third parties to believe the agent possessesthe authority to act, then the principal will be bound by the agent’sacts within the scope of this apparent authority.


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§ 11:25 Types of agency permitted in commercialrelationships

The 1992 Law does not stipulate different categories of agencies.The 1992 Law simply states that commercial agency agreements mustbe made in writing and may be of fixed or indefinite duration.Therefore, it may be presumed that any written commercial agencyagreement is valid as long as it is made for lawful purpose and thecontracting parties actually intend such an agency relationship toexist.

§ 11:26 Termination of agency

An agency agreement may be terminated in any of the followingways:

1. Revocation of the agent’s authority by the principal;2. Renunciation of the business of the agency by the agent;3. Completion of the business of the agency (fixed duration);4. Death or unsoundness of mind of either principal or agent;5. Adjudication of the principal as bankrupt or insolvent; and/or6. Provision of written notice of termination by either the principal

or agent pursuant to the Law where the duration of the agencyagreement is not fixed.

VII. ASSIGNMENTS

§ 11:27 Assignments of contracts and rights thereunder

The Contracts Law is silent on the issue of whether a contract orcontractual rights may be assigned. Therefore, the matter is regulatedonly by Common Law and equitable principles.

Assignment of a contract takes place when the liabilities imposed orthe rights acquired thereunder are transferred to a person who wasnot a party to the original contract. It is a general rule that a party toa contract cannot transfer his liability thereunder without the consentof the other party. There is, however, no objection to the substitutedperformance by a third person of the duties of a party to the contractwhere the duties are disconnected from the skill, character, or otherpersonal qualifications of the party to the contract. However, in suchcircumstances the liability of the original contracting party is notdischarged. Liability under a contract may be transferred so as to dis-charge the original contract subject to the consent of the contractingparties. Such a transfer is not an assignment of liability but a nova-tion of the contract.

The common law has leaned against assignments of contractualrights. However, in equity both legal and equitable choses in actionhave always been subject to assignment. Thus contractual rights, be-ing legal choses in action, may in general be assigned.



§ 11:28 Assignment of debts

Assignment of debt does not exist as an express provision in theContracts Law. The application of common law by the Cypriot courtssuggests that this issue is regulated under applicable equitableprinciples.

In equity, a debt owed by one party to another party who assignsthe debt to a third party is a legal chose in action. Therefore, therecan be an equitable assignment of such a legal chose in action. Suchan assignment of the debt need not be in any particular form due tothe fact that equity will look to the intention of the parties and notthe form used. An equitable assignment of a debt is considered to becomplete, irrespective of whether notice has been given to the debtor.

VIII. BILLS OF EXCHANGE, PROMISSORY NOTES ANDCHECKS

§ 11:29 Bills of exchange: formal requirements

A bill of exchange is defined in the Bills of Exchange Law as anunconditional written order addressed by one person to anotherperson, signed by the person issuing said order and which requiresthe addressee of the order to pay on its presentation or at a fixed ordetermined future date a certain amount of money to a specifiedperson or to the order of a specified person or to the bearer. The Lawstates that a document that does not comply with the above terms orconditions or which orders that an additional action be performedalong with the payment of money does not constitute a bill ofexchange.

It should be noted that a bill of exchange will not be rendered in-valid because of the fact that it is not dated or no mention of anyconsideration for its issue is made on the face of the bill or if it doesnot specify the place of issue or the place it may be made payable.

§ 11:30 Promissory notes: formal requirements

A promissory note is defined in the Bills of Exchange Law as anunconditional written promise provided by one person to anotherperson and signed by the person making the promise who promisespay on demand or at a fixed or determined date a certain amount ofmoney to a specified person or to the order of such a person or to thebearer of the note. A promissory note made payable to the order of theissuer is not a valid promissory note unless or until it is endorsed bythe issuer of the note.

§ 11:31 Checks: formal requirements

A check is defined in the Bills of Exchange Law as a bill of exchangedrawn on a bank and which is payable on demand. Generally speak-


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ing, the requirements applicable to a bill of exchange also apply tochecks.

§ 11:32 Presentation and protest

When the bearer of a bill of exchange wishes to present the bill forpayment, the bearer must present the bill to the person from whompayment is demanded and once the bill is paid, the bearer must im-mediately surrender the bill to the person making the payment.

As regards the presentation of checks for payment, due to the adop-tion of new technologies, a banker need not physically present a checkto another banker for payment. Rather, he can electronically transmitcertain vital details concerning the check in question instead of theoriginal check and this shall constitute valid presentation for payment.The vital details of the check which are required for valid presenta-tion are: the check number, the bank sort code of the check, the ac-count number of the issuer of the check and the amount stated on thecheck.

A promissory note which stipulates that it is payable at a specifiedplace must be presented at the said place for payment in order torender the issuer liable for payment. In any other case, presentationof the promissory note shall not be required to render the issuer of thenote liable to make payment. However, presentation of the note isrequired in order to render the endorser of a note liable for payment.

As regards the issue of protest concerning bills of exchange, checksand promissory notes, the Bills of Exchange Law states that the pro-visions that apply to bills of exchange shall also apply to checks orpromissory notes.

When a bill of exchange has not been honored, the bearer mayprotest if he deems it expedient for non-acceptance or non-paymentdepending on which applies. However, it is not necessary for thebearer or the beneficiary to make any protest since his rights againstthe issuer or the endorser are safeguarded as a matter of law. If thebearer wishes to protest, he must do so either on the day that the billof exchange was not honored or the following working day at thelatest. It should be noted that the bill of exchange must be protestedat the District Court in whose jurisdiction the bill was not honored.

§ 11:33 Endorsements

The endorser of a bill of exchange, by endorsing it, is burdened withthe obligation of compensating the bearer in the event that the saidbill is not honored when presented for payment. The endorser of thebill is also prohibited from questioning or denying the authenticity ofthe signature of the issuer and the signatures of any prior endorse-ments, as well the validity of the bill or the good title of the bearer ofthe said bill. The above provisions which apply to a bill also apply tochecks and promissory notes.



§ 11:34 Recourse and non-recourse

As described in § 11:32 above, when a bill is dishonored by non-payment or non-acceptance, the bearer of the bill has an immediateright to recourse against the drawer, acceptor and all prior endorsers.

An endorser who endorses a bill with the words “without recourse”is not liable for the payment of the bill as an ordinary endorser.

Such an endorser transfers his rights in a way that denies liabilityas an endorser, putting anyone giving value for the bill on notice thatthere is no remedy available against him should there be a default inthe payment of the bill. The above provisions which apply to a billalso apply to checks and promissory notes.

§ 11:35 Fraud and forgery

A forged or unauthorized signature is generally invalid in the caseof bills, checks and promissory notes. The same rules apply to bothforged and unauthorized signatures except that an unauthorizedsignature can later be ratified.

In general, payment cannot be obtained from a bill, check or prom-issory note bearing a forged signature. However, in the case of anendorser faced with a claim by a subsequent holder of a bill or note,the endorser cannot contest the authenticity of the drawer’s signatureor of the signature of any prior endorsers.

In the case of a check, the drawer must notify his bank and orderthe bank to make “stop payment” of the forged check before paymentis made and his account debited. If the bank makes payment, thedrawer has no recourse against the bank if it has acted in good faithand must therefore attempt to recover from the person who receivedthe payment.

§ 11:36 Legal interest rates

Interest is payable on a promissory note or a bill only if such provi-sion is made in the bill or note. Where a bill is to be payable withinterest, unless otherwise provided, interest runs from the date of itsissue.

Generally speaking, there is no maximum or minimum interest ratewhich applies to most commercial transactions. It should be noted fol-lowing Cyprus’s adoption of the euro as its official currency and itsmembership of the Eurozone in effect from 1 January 2008, the inter-est rates set by the Central Bank’s monetary policy committee have tobe in line with and at the same level as the corresponding interestrates set by the European Central Bank.

Law Number 72(I) of 2011 was introduced in 2011, regulatingpersonal loans and limiting the maximum rate of interest which maybe charged on them. The new law amended the Criminal Code, andinserted a new provision, section 314A, which effectively criminalizes


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usury under certain circumstances. Specifically, where a person, in re-lation to the payment or repayment of a loan, receives, charges or col-lects, for himself or for a third party, an economic advantage (e.g.interest) that exceeds the reference interest rate, such person is guiltyof a criminal offence. The law defines the “reference interest rate” asbeing the average of the annual interest rates charged by creditinstitutions for consumer loans increased by half, with a maximumincrease of ten percentage points. This interest rate is calculated on aquarterly basis by the Central Bank of Cyprus and is published in theOfficial Gazette of the Republic.

IX. REAL ESTATE

§ 11:37 Forms of ownership

The Immovable Property (Tenure, Registration and Valuation) Lawis the foundation of modern Cypriot land law. Immovable property(real estate) is defined in the Law to include:

1. Land;2. Buildings or other erections, structures, or permanent fixtures

to land;3. Trees, vines, and any other thing whatsoever planted or grow-

ing on any land and any produce thereof;4. Springs, wells, water and water rights;5. Privileges, liberties, easements, and any other rights whatso-

ever appertaining to land; and/or6. Any undivided share in property as stated above.

According to section 4 of the Law, no estate in land or other inter-est, right or privilege may be created, transferred, or acquired exceptunder the provisions of the Law. In this context, the term “estate inland” denotes any right directly connected with the ownership andtenure of any immovable property and capable of being registered atthe Land Registry. The term “owner” as it pertains to land is definedby the Law as the person entitled to be registered as the owner of anyimmovable property whether he is so registered or not.

§ 11:38 Land registration and transfer of title

The Land Registry Department has the exclusive responsibility andprovides the means and instruments for the establishment of rights ofownership in immovable property, the survey and cartography ofCyprus, the registration, transfer, mortgage of immovable property,the valuation of properties and the administration of government ofland.

The Land Registry Department is divided into six District LandsOffices, each having jurisdiction to deal with the registration andtransfer of land located in its geographic area.



The Law requires that transfers of land must be in writing andhave the following documentation attached with the application fortransfer of title:

1. A written contract of sale, duly signed by the seller and thebuyer, stating the consideration provided as well as a descrip-tion of the land and where it is situated;

2. A completed and signed official transfer form;3. A certificate from the Inland Revenue that all property taxes

owed have been settled;4. A certificate from the local authority in whose jurisdiction the

property is situated that all local taxes pertaining to the prop-erty have been paid;

5. An indication on the contract of sale that the relevant stampduty has been paid; and

6. A copy of the title deed or land registry search report indicatingthe owner of the property as well as providing a general de-scription of the property.

§ 11:39 Leases

A lease agreement for a term of more than twelve months must bein writing and be duly signed by the contracting parties in the pres-ence of two witnesses. Long leases may be registered at the LandRegistry. As provided for in the Law, the prerequisites for the validregistration of a lease agreement are the following:

1. The lessor is to be the registered owner of the leased property;2. The lease agreement expressly provides for its registration;3. The duration of the lease shall exceed 15 years;4. The contract is to be registered within three months from the

day of its execution;5. The consent of the mortgagor or creditor is obtained if the prop-

erty is so burdened;6. A copy of the title deed is provided; and7. All relevant stamp duties and other fees are paid.

§ 11:40 Zoning and land use planning

There are extensive zoning and land use planning laws and regula-tions which regulate the level and intensity of economic developmentin different geographical areas of the country, either rural or inner-city areas. Zoning laws are quite strict and rigid and generally rele-vant permits or licenses must be first obtained from the appropriateauthorities prior to the commencement of any work of construction ordevelopment.

Within city-limits, the relevant authority is the local municipalcouncil, and in rural areas the local district officer of the Departmentof Town Planning and Housing is the relevant authority. It should be


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noted that most towns or cities on the island have prepared or are inthe process of preparing “Town Master Plans” to assist them inregulating commercial development of their local districts in a consis-tent, economically viable and environmentally sound manner. In rela-tion to light or heavy industry, zoning laws have effectively kept suchindustry at the outskirts of towns or cities and in designated industrialzones.

§ 11:41 Oil, gas, and mineral law

Generally speaking, activities involving mining, quarrying, or pros-pecting for minerals, precious metals or natural resources locatedunder the earth are regulated by the Regulation of Mines and Quar-ries Law. This provides that any form of mining, prospecting, or quar-rying on the territory of the Republic of Cyprus is unlawful unless avalid license or permit is issued by the Council of Ministers or the lo-cal district officer in some instances. It should be noted that the Lawprovides a presumption that any minerals that are found beneath theearth are the property of the state.

Although Cyprus was known in ancient times for its rich coppermines, these mines were depleted long ago and only quarrying for theprovision of raw materials for the construction industry takes placenow.

As a member of the European Union, Cyprus has aligned its energypolicy with the acquis communautaire and transposed all relevantDirectives into national law. Hydrocarbon exploration and exploita-tion activities in Cyprus and its Exclusive Economic Zone are governedby the Hydrocarbon (Prospection, Exploration, and Production) Law(Law Number 4(I) of 2007), which transposed into national law Direc-tive 94/22/EC on the conditions for using authorizations for theprospection, exploration and production of hydrocarbons.

The Hydrocarbon Law and the Hydrocarbon (Prospection, Explora-tion and Production) Regulations (Regulation Number 51 of 2007 andRegulation Number 113 of 2009) together set out the licensingframework. Successful applicants for a license are required to enterinto an Exploration and Production Sharing Contract (EPSC), in theform published by the Ministry of Energy, Commerce, Industry, andTourism, which is the regulatory authority. The Aphrodite gas field,an offshore gas field off the southern coast of Cyprus located at the ex-ploratory drilling block 12 in the maritime Exclusive Economic Zone,is estimated to hold commercially viable quantities of natural gas,and exploration is taking place in several other blocks.

X. LIENS ON REAL PROPERTY

§ 11:42 Property subject to liens

Mortgages or liens may be registered against any real property, as



defined by the Immovable Property (Tenure, Registration and Valua-tion) Law, as security for the payment of a debt owed by the owner ofthe property in question or for the performance of an obligation by thesame owner.

§ 11:43 Creation of liens

Liens or legal mortgages over any immovable property may be cre-ated by or with the written consent of the registered owner of the im-movable property concerned as provided in the Immovable Property(Transfer and Mortgage Law) of 1965, as amended. On a properconstruction of the provisions of this Law it is not possible to create avalid equitable mortgage, and a legal mortgage is the only form ofmortgage possible.

§ 11:44 Perfection of liens

A legal mortgage is perfected through its registration in the localDistrict Land Registry Office which has jurisdiction over the propertyin question.

According to section 21 of the 1965 Law, in order to properly regis-ter a mortgage, the following documentation needs to be submitted tothe District Land Registry Office with the appropriate forms:

1. A description of the property which shall be encumbered by themortgage, including date and reference number of registration;

2. Declaration concerning any changes (if any) to the status of theproperty in question and a description of the changes whichinclude any lease over the property;

3. Properly stamped mortgage contract indicating the amountsecured by the mortgage, applicable interest rate and date ofredemption;

4. Declaration by the mortgagor that he or she is the registeredowner of the said property and that he or she consents tomortgage it for the benefit of the mortgagor;

5. Declaration by the mortgagee that he or she agrees to acceptthe said mortgage under the terms of the mortgage contract;and

6. Original or certified copy of the title deed(s).

It should be noted that where the same property is burdened by twoor more mortgages, their priority is determined by the date they wereregistered with the Land Registry Office.

Furthermore, where a property that has been mortgaged is sold, thetransfer cannot be completed unless the debt is settled and themortgage released, or unless the mortgagee gives its written consentto the transfer of the property and the purchaser signs a declarationacknowledging his liability under the mortgage.


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§ 11:45 Judicial liens

Judicial liens, including as they relate to real property, arediscussed below in §§ 11:94 to 11:97.

§ 11:46 Realization of property subject to lien

In the event that the mortgagor defaults in the payment of any sumor installment as provided for in the mortgage contract, the mortgageehas the right to apply to the District Land Registry Office to have theproperty subject to the mortgage sold by public auction. Such an ap-plication may only be made after notice has been given to themortgagor and a period of 30 days has elapsed from the service of thenotice with no payment having been received by the mortgagee at theend of this period.

The mortgagor has a right to appeal against a proposed public auc-tion to the appropriate District Court within 30 days of receipt of no-tice of the proposed sale. If the mortgaged property concerned is themain dwelling and residence of the mortgagor and/or his family, themortgagor will be entitled to submit the final bid at the public auc-tion, which, if it matches the highest other bid received by the auc-tioneer, will result in a sale to the mortgagor at that price, with theproceeds being used to pay the mortgagee.

If the proceeds of the auction are insufficient to satisfy the mortgagedebt in full, any mortgage or mortgages will remain on the propertyand the mortgagee will be prohibited from making any further at-tempt to sell the mortgaged property by public auction for two yearsfrom the date of the auction.

In the event that the property is burdened with a prior mortgage,the mortgagee will need to apply to court for an order ordering theDirector of the District Land Registry Office to proceed with the saleof the property subject to the requirement that the mortgagee/applicant deposits with the court a certain amount of money that thecourt shall declare adequate to compensate the other parties that hadregistered a mortgage prior to the date the applicant had so registered.

§ 11:47 Termination of liens

Once the mortgagor has met his obligations under the mortgageand paid his debt to the mortgagee, the mortgagee is obligated to de-posit the appropriate forms with the Land Registry Office in order todischarge the property from the mortgage.

A mortgage also may be terminated by the mutual consent of theparties subject to the mortgage contract by depositing with the LandRegistry Office the appropriate documentation properly completedand signed signaling their desire to have the mortgage in questiondischarged.

A mortgage may also be terminated by judicial order, following anapplication to the court by the mortgagor, where:



1. the mortgagee refuses to discharge the mortgage even thoughthe debt of the mortgagor has been paid in full;

2. the mortgagee unreasonably refuses to accept payment of thedebt owed by the mortgagor;

3. the mortgagee has died and his personal representatives cannotbe traced; or

4. the mortgagee is a company that has been liquidated.

XI. PLEDGES AND CHATTEL MORTGAGES

§ 11:48 In general

The following sections deal only with pledges, because the law inCyprus makes it impossible to create a mortgage over a chattel. Onlyimmovable property may be mortgaged.

§ 11:49 Property subject to pledge

A pledge or pawn is a bailment of personal property as security fora debt or engagement. A pawner is the person who relinquishes athing to another party (the pawnee) to be held as security by thepawnee for the payment of the pawner’s debt or liability.

The subject matter of the contract of pawn usually consists of goodsand chattels capable of actual or constructive delivery. Other forms ofpersonal property, including negotiable instruments, may be thesubject of the contract where they can be identified.

§ 11:50 Creation of pledge

A contract of pledge over a chattel is regulated by the common lawand by the Contracts Law. Generally speaking, pledges do not requireany specific formalities and the contract creating the pledge may beoral or written. The only requirement is that of actual or constructivedelivery of the chattel pawned in consideration of a debt.

However, under article 138 of the Contracts Law, pledges of bills ofexchange, promissory notes, bonds, or share certificates are invalidand may not be executed unless the contract of pledge complies withthe following requirements, namely:

1. That the contract be in writing;2. That the contract be signed at the end by the pawner; and3. That the contract be made in the presence of two witnesses who

shall in turn sign it.

§ 11:51 Perfection of pledge

Perfection of a pledge occurs when any relevant formalities concern-ing the contract of pledge have been adhered to and the chattel that isthe subject matter of the pledge contract is delivered by the pawner to


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the pawnee or, stated in other terms, when the pawnee takes posses-sion of the pledged item.

In addition, for a pledge over shares in a Cyprus company to bevalid and enforceable, the pledgee must give notice of the pledge tothe company, the company must make a memorandum of pledge in itsregister of shareholders against the shares concerned, and it mustprovide the pledgee with a certificate of the memorandum of pledge.

Law Number 99(I) of 2009 removed the requirement to registerpledges over shares in Cyprus companies, and Section 90 of theCompanies Law, which deals with registration of charges, has beenamended to exclude a pledge of shares and the rights emanating fromit from the scope of Section 90. Nevertheless, some lawyers adopt a“belt and braces” approach and register the charge, particularly whenacting for lenders, and the Registrar of Companies continues to acceptsuch registrations.

§ 11:52 Realization of property subject to pledge

As provided in article 134 of the Contracts Law, upon default, whenthe pawner fails to perform the obligations secured under the pledgeagreement or fails to pay the debt secured by the pledge on the stateddate, the pawnee may take all necessary judicial steps against thepawner in relation to the debt or obligation secured by the pledge andmay retain possession of the pledged chattel as collateral security.

Alternatively, the pawnee may sell the pledged chattel subject tothe requirement of giving the pawner adequate notice of the sale. Ifthe proceeds of sale are insufficient to discharge the debt then thepawner remains liable to the pawnee for the balance. On the otherhand, if the proceeds of sale exceed the value of the debt owed thenthe pawnee is obliged to pay the surplus to the pawner.

§ 11:53 Termination of pledge

The contract of pledge or pawn is terminated by the satisfaction ofthe debt or engagement and the redelivery of the pledged property tothe pawner, since the common law implies a term in the pledgecontract on the part of the pawnee to redeliver the property to thepawner on payment by the latter of the sum advanced with interest.

The essence of this extinction of the contract lies in the pawnee be-ing divested wholly of his “special property” and possession of theproperty pledged. However, the pawnee has the right to hand back tothe pawner the property pledged for a special purpose without affect-ing his security and without extinguishing the contract.

XII. INTELLECTUAL PROPERTY

§ 11:54 Copyrights

Copyrights in Cyprus are regulated by the Right of Intellectual



Property Law of 1976, as amended. Copyrights are recognized underthe Law for every protected object whose beneficiary is at the time ofcreation of the right a qualifying person, namely:

1. a person who is a citizen of the Republic of Cyprus or whohabitually resides in the Republic;

2. a legal person incorporated in the Republic; or3. a citizen of another EU member state.

Copyright exists in scientific works, literary works, musical works,computer software, artistic works including photographs, films,databases, sound recordings, and broadcasts, but only until 70 yearsafter the death of the author. In relation to cinematographic films (i.e.movies shown in cinema or on television or other media), the copy-right continues until 70 years after the death of the last survivor ofthe following persons:

1. producer;2. primary director;3. script writer;4. screen play writer; and/or5. music composer who composed the musical score of the film.

The Law provides criminal sanctions and civil remedies for copy-right infringement. For the criminal offenses listed in the Law, penal-ties include a fine or imprisonment for up to three years. In addition,the court may order copies of the work in the possession of the of-fender to be destroyed or delivered to the owner of the copyright. Civilremedies include damages, destruction or delivery of infringing copiesand of the equipment by which copies are produced, an account ofprofits and an injunction.

§ 11:55 Trade marks

The registration and protection of trademarks in relation to goodsand services is governed by the Trade Marks Law, as amended. Theinternational classification of goods applies under which goods andservices are categorized into 34 classes and 11 classes respectively.

To register a trade mark in Cyprus, an applicant or a licensedlawyer must file with the Registrar of Trade Marks an applicationcontaining all relevant details, including the name, address and oc-cupation of the applicant, the name and/or picture of the trade markand a form signed by the applicant authorizing the lawyer to file theapplication.

On receipt of the application the Registrar appoints a filing date, al-locates a number to the trademark and conducts a search to establishthe registrability of the trademark. If he considers that the trademarkis not registrable, the Registrar may impose conditions or object to theregistration of the mark. When the Registrar has accepted the ap-


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plication, the mark will be registered and its registration will beadvertised in the Official Gazette of the Republic.

The duration of registration of the trade mark or validity of suchregistration is seven years which may be extended for 14 years at atime. In case of infringement, the aggrieved party may apply to thecourt for a civil remedy such as an injunction and/or damages.

Following Cyprus’s accession to the EU, applications for registra-tion of Community Trademarks may be filed directly with the Officeof Harmonisation for the Internal Market (OHIM), while all Com-munity Trademarks registered or applied for before the date of acces-sion will automatically be extended to Cyprus.

§ 11:56 Trade secrets

In respect of confidential information and know-how of a commercialor scientific nature, the only means of protection is of a contractualnature. Commercial agreements must contain clauses to protect tradesecrets for a specified or indefinite period.

Such clauses should also be included in employment agreements inorder to safeguard trade secrets after an employee resigns, retires oris dismissed from his job. It would seem that the only remedies avail-able for breach of such confidentiality agreements are of a civil nature,namely damages and/or injunctions.

§ 11:57 Patents

In Cyprus, the registration and protection of patents are regulatedby the Patents Law of 1998, as amended. To register a patent, an ap-plicant or a lawyer licensed to practice law in Cyprus must file an ap-plication in the prescribed form with the Patent Registrar.

Once the application has been filed and all relevant fees paid, theapplication will be examined to determine whether it complies withthe relevant provisions of the Law and the result of the examinationwill be reported to the Registrar. If the application filed does notcomply with the provisions of the Law, the applicant will be given theopportunity to make any necessary amendments before the Registrardecides the fate of the application. The application is published in theofficial gazette of the Republic within 18 months of its filing.

If no problems or complications arise with the application, the ap-plicant will be called on to file within a prescribed period a searchreport prepared by a prescribed authority which must state the “state-of-the-art” matters which must be taken into account to ascertainwhether the subject matter of the application refers to an inventioncapable of patent protection.

Once the application has been accepted, the registrar will grant apatent on the basis of the application subject to the payment of a fee.The Registrar will then issue a patent certificate, which will bepublished in the official gazette of the Republic.



Once a patent has been registered, it is protected for a period of 20years from the date of filing of the application, subject to the paymentof annual renewal fees to the Registrar.

Once a patent has been registered, it is prohibited for any personother than the patentee to manufacture, sell, import or otherwisecommercially exploit either the patented product or the productobtained by the patented process. In the event of infringement, thepatentee may bring an action in court seeking an injunction and/ordamages.

XIII. ELECTRONIC COMMERCE

§ 11:58 Digital signatures / encryption policy

In Cyprus, the topic of electronic signatures or e-signatures isregulated by the Legal Framework for Electronic Signatures andOther Related Matters Law of 2004. This Law was adopted toharmonize Cyprus’s legislation with Directive 1999/93/EC of theEuropean Parliament and Council of 13 December 1999 on a Com-munity framework for electronic signatures. The Law’s goal is theestablishment of a legal framework to govern electronic signaturesand certain certification services with the aim of facilitating the use ofelectronic signatures and their legal recognition. In addition, the Lawalso requires the providers of certification services to utilize encryp-tion security in the provision of their services.

As far as encryption policy is concerned, most, if not all, e-commerceservice providers have technical measures installed to provide encryp-tion security protection to users of their websites, particularly in rela-tion to the processing of sensitive information such as credit cardnumbers and other personal details. Such service providers haveinstalled encryption technology more out of copying good commercialmodels as seen abroad as well as to encourage consumer confidence intheir service rather than out of any legal obligation.

However, the Data Protection Law of 2001 (Law Number 138(I)/2001) requires persons entrusted with personal data of a sensitivenature, in commercial transactions or otherwise, to take all reason-able steps and technical measures to secure and protect personal datafrom unauthorized use, interference or loss. This would seem to implythat encryption is a matter that e-commerce providers must take intoserious consideration and implement. The new EU General DataProtection Regulation (GDPR) that came into force throughout theEuropean Union, including Cyprus, on 25 May 2018 reinforces theneed for persons dealing with the storage, transmission, or processingof personal data to take all reasonable measures to protect the integ-rity and security of personal data.

§ 11:59 Liability of on-line service providers for actions ofsubscribers

Generally speaking, Law Number 156(I)/2004 (i.e. Various Aspects


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of the Services of the Information Society and especially of ElectronicCommerce and Related Matters Law of 2004) does not hold on-lineservice providers liable for their subscribers’ actions where the serviceprovider merely acts as a conduit for the exchange of data and doesnot initiate or interfere directly with the transmission or receipt ofthe data.

The Law further provides that on-line service providers shall not beliable where they are not actually aware of any unlawful action on thepart of their subscribers and take all reasonable measures to preventsuch action (e.g. by cutting off links or access of their clients) whenthey become aware of any illegal activity.

§ 11:60 Internet jurisdictional issues

As regards the issue of jurisdiction, Law Number 156(I)/2004 doesnot add to or interfere with matters of private international law.Rather it requires contracting parties to state the governing law oftheir electronic contract and does not interfere with aspects of freedomto contract as regards jurisdictional matters.

§ 11:61 Licensing issues

Law Number 156(I)/2004 states that the provision of professionalservices via the internet by professionals (e.g. doctors, lawyers, etc.) ispermissible as long as this does not breach rules and regulations oftheir respective professional bodies dealing in particular with issuesconcerning their independence, their dignity and their professionalethics as well as matters dealing with professional secrecy and dutiesowed to their clients and colleagues. It would seem that unless profes-sional associations or bodies bar the provision of services over theinternet, there is no licensing requirement for the provision of theseservices.

§ 11:62 Restrictions on use of Internet

Law Number 22(III)/2004, the “Convention on Cybercrime (Ratify-ing) Law of 2004” criminalizes a number of activities via the internet.The Law provides for a number of criminal sanctions, including finesand terms of imprisonment, for those persons found guilty of a numberof categories of illegal activity using the internet. Offenses includegeneral hacking, hacking into computer or network databases in orderto destroy, alter or delete data kept on such networks, denial of ser-vice attacks and the creation of programs in order to facilitate hacking.

Further offenses—other than those having to do with hacking—include using a computer for the purpose of forgery or as a means todefraud another person. Another category of offenses relates tointernet content and includes offenses relating to the possession ordistribution of child pornography, as well as offenses relating to thebreach of intellectual property rights.



§ 11:63 Privacy and e-mail issues

As regards the issue of privacy, as provided in the Data ProtectionLaw of 2001, a party may process any data of a sensitive or othernature regarding some other person as long as that person hasconsented. As of 25 May 2018, with the implementation of the EU’sGDPR in Cyprus, the Data Protection Law of 2001 has been repealed.However, the principles of consent and related matters are stillreflected in the new GDPR regulation on the processing of personaldata.

Therefore, it would seem that as long as a party has given hisconsent, (such as consent to e-mail monitoring by the employer),through a contract or other means which they have freely signed oraccepted, then the issue of privacy is circumvented.

XIV. COMPETITION AND ANTITRUST LAWS

§ 11:64 In general

The principal laws in this area are the Protection of CompetitionLaws of 2008 and 2014 (Laws Number 13(I) of 2008 and Number 41(I)of 2014), which regulate restrictive agreements and antitrust, and theControl of Concentrations between Undertakings Law, Law Number83(I) of 2014, which regulates mergers and acquisitions. Thesestatutes reflect relevant European Union competition law, includingthe Treaty on the Functioning of the European Union (TFEU),European Community Regulations 1/2003 and 139/2004, and othersecondary legislation and guidelines. As in all Member States,European Union law takes precedence over national law; thus, in theevent of inconsistency, it is European Union law that will apply.

The Commission for Protection of Competition is the national com-petition authority responsible for ensuring the existence of a competi-tive market in accordance with domestic and European Union law.The Commission has the exclusive competence to investigate and takedecisions on competition matters and power to impose penalties andset conditions for the conduct of business in the event of breach of thelaw.

XV. BUSINESS ORGANIZATIONS

§ 11:65 Corporations—Formation

A corporation or company is a legal person created under statutethat is separate from its shareholders, employees or officers. Corpora-tions in Cyprus are governed by the Companies Law, Chapter 113. Acorporation is deemed to have been formed or incorporated in Cypruson the date of issue of a certificate of incorporation from the Registrarof Companies.

The documents that must be submitted to the Registrar of Compa-


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nies prior to incorporation include a duly signed Memorandum andArticles of Association of the company (specifying, among other things,the name, objects, nominal share capital and the fact that themembers’ liability is limited), notice of the registered address, namesand addresses of the founding members of the company and thenumber of shares allocated to them, and notice of the details of theproposed directors and company secretary. It should be noted that theRegistrar requires payment in advance of all its fees before incorporat-ing any company.

§ 11:66 Corporations—Shareholders

Shareholders or members are the owners of the corporation andtheir details and shareholdings must be recorded in the Register ofMembers which must be kept by every company at a specified place,usually being the registered address. The Companies Law providesthat a private limited company must have at least one member andno more than fifty. A public limited company must have at least sevenmembers, with no upper limit.

A person may become a shareholder by either acquiring shares in acompany through a share issue or by transfer from an existingmember or by transmission from a deceased member.

A virtually universal feature of limited companies in Cyprus is thatthe liability of members is limited to paying the nominal share value(including any premium) of issued share capital when called by thecompany to do so. This means that shareholders are not personally li-able for a company’s debts or obligations. In the event of a winding-upof a company, if the issued share capital is all paid up then theshareholders will not be liable to pay any further amount. It is pos-sible to incorporate a company with unlimited liability for its membersbut in practice this is never the case.

Where only one class of shares exists, it is normally presumed thatthe holders of these shares shall enjoy equal voting rights, dividendrights or other rights enjoyed by other fellow members. Where acompany wishes to differentiate the rights enjoyed by its members, itnormally has or creates two or more classes of shares with differentrights attached.

Most issues that are dealt with at annual general meetings orextraordinary general meetings of shareholders normally require ei-ther an ordinary resolution or a special resolution to be ratified by themembers. An ordinary resolution requires a simple majority of thevoting shareholders in order to be approved, while a special resolutionrequires a three-quarters majority of the voting members to be passed.These issues are normally dealt with by the Articles of Association ofthe corporation which specify what kind of resolution is required.

§ 11:67 Corporations—Liability and bankruptcy

As already stated, shareholders of limited companies have limited



liability with respect to the debts or obligations of the corporation.This means that creditors must seek to recover from the assets of thecorporation itself and not from the shareholders. However, in certainlimited circumstances, a creditor may petition the court to “lift thecorporate veil” so to speak in order to hold the shareholders liable intheir personal capacity. Such circumstances include where the affairsof the corporation are so closely controlled by the shareholders and itmay be shown that the corporation is being manipulated in a fraudu-lent manner. Another instance where shareholders may be heldpersonally liable is in the situation where a minority shareholder(s)allege(s) oppression on the part of majority with respect to the run-ning of the affairs of the corporation.

Bankruptcy or insolvency is governed by the relevant provisions ofthe Companies Law, which deal with the rights of creditors to petitionthe court to have a company wound up on the grounds of insolvencydue to its inability to pay its debts within the statutory time period.Alternatively, the members may resolve to wind up the company. TheCompanies Law also provides procedures for corporations to negotiatecompromise arrangements with their creditors without having thecorporation wound up, for a secured creditor appoint a receiver, or forthe company to be placed under the direction of an independentinsolvency practitioner, known as an “examiner”, with extensive pow-ers to restructure it, subject to creditors’ approval.

§ 11:68 Corporations—Management and representation

The management of a corporation’s business affairs is the soleresponsibility of its elected Board of Directors, unless otherwiseprovided in its constitutional documents. The Board of Directors usu-ally meets frequently to discuss the affairs of the corporation and topass resolutions which affect the business affairs of the company.Among the Board’s other tasks, the directors approve the issue andtransfer of company shares, appoint the company’s staff and approveits financial statements. In performing these duties, the directorsmust always act in good faith and exercise due care and diligencewith respect to the company and its shareholders.

The day to day management of the corporation’s affairs is left tocorporate officers appointed by the Board to perform certain tasks.These officers have actual or ostensible authority to bind a corpora-tion with respect to decisions or matters that a person in that positiongenerally makes.

§ 11:69 Corporations—Profit and losses

The property, assets and liabilities of a corporation do not belong tothe shareholders but rather are the property or the responsibility ofthe corporation itself. As to the issue of profits, these may be disposedof in two ways. Annual profits may either be reinvested in thecompany or distributed to shareholders as dividends.


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The decision for the distribution of share dividends is the preroga-tive of the corporation’s board of directors unless the corporation’sconstitutional documents provide otherwise. It is common for mostcorporations to declare the issue of share dividends at the annual gen-eral meetings of their members and to have the members approve ofthe dividend by the passing of an ordinary resolution.

§ 11:70 Corporations—Termination

According to the Companies Law, there are essentially two mainways in which a corporation may be wound up and dissolved. Oneway is through a compulsory winding up by the court and other wayis through a voluntary winding up of the company by its members orits creditors.

A company may be wound up by the court if it has resolved byspecial resolution to be wound up by the court, if the company fails tocommence its business within a year of its incorporation or if it is un-able to pay its debts. The parties that are eligible to file a petitionwith the court to have the corporation wound up are the companyitself, the Official Receiver, a creditor or a contributory of thecompany.

A voluntary winding up is initiated by the members of the company,through the passing of a resolution (usually a special or extraordinaryresolution) to this effect. If the company is solvent and the directorsfile a statutory declaration that it is able to pay off its debts within a12 month period from the commencement of winding up proceedings,the liquidator is appointed by the members and reports to them. If thecompany is insolvent and no declaration of solvency can be made thenthe directors must convene a meeting of its creditors to appoint aliquidator, who is accountable to the creditors.

§ 11:71 Corporations—Liability of officers and directors

In general, directors owe a duty to their corporation to manage it inaccordance with the Companies Law generally and in accordance withthe corporation’s constitution specifically. It may be stated that direc-tors owe fiduciary duties to their company. These fiduciary dutiesinclude a duty to exercise their powers for the benefit of the corpora-tion, a duty not to fetter or restrict their right to exercise their powersfreely and a duty to avoid conflicts of interest.

In addition to their fiduciary duties, directors owe a duty of care totheir company at common law not to act negligently in managing theaffairs of the company. The standard of care is higher than that of thereasonable man but rather of the reasonable and prudent director. Itshould be noted that an error of judgment may not in itself constitutenegligence.

The Companies Law also renders a director liable in the case of



fraudulent trading or misapplication of company property. In the caseof fraudulent trading, the Law states that in the event of winding upof a company, if it appears that any business of the company has beencarried on with an intent to defraud creditors or for any fraudulentpurpose, the court may declare that any of the directors who wereknowingly a party to the fraud will be personally liable for all thedebts of the company. However, prosecutions for fraudulent tradingare rare because of the high standard of proof required. The Law alsoprovides for making a director liable to repay or restore money orproperty with interest to the company if, in the course of winding up,it appears that a director has misapplied or retained or become ac-countable for any money or property of the company.

§ 11:72 Corporations—Liability of shareholders

As already stated, shareholders are not normally responsible for theactions or liabilities of the corporation. Normally, the liability of ashareholder is limited to the amount unpaid on any issued sharecapital that he may hold at the time of winding up.

Exceptions to the above rule concern the situation where sharehold-ers have acted in a fraudulent manner, and a court orders the liftingof the corporate veil to allow the shareholders to be held personally li-able for the corporation’s liabilities. Another exception involves li-ability of shareholders where proceedings are instigated by an op-pressed minority of shareholders.

§ 11:73 General partnerships—Formation

Partnerships are registered in Cyprus under the Partnerships andBusiness Names Law, Cap.116, as amended, which is based on En-glish legislation. A partnership may consist of between 2 and 100 nat-ural or legal persons, carrying on a business in common with a viewto profit. In order for a partnership to be formed, a written declarationsigned by all the partners must be sent to the Registrar of Partner-ships containing the following information:

1. The proposed name of the partnership;2. The general nature of its business;3. Principal place of business;4. The full names of the partners, their nationality and correspon-

dence address;5. The date when the partnership was formed; and6. The names of the partners authorized to manage the partner-

ship and sign on its behalf.

§ 11:74 General partnerships—Liability and bankruptcy

In a general partnership, every partner is liable severally and jointlywith the other partners, without limit, for all debts and obligations of


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the partnership incurred at the time he was a partner. After apartner’s death, his estate is severally liable for such debts and obliga-tions, subject to prior payment of his separate debts.

The bankruptcy of any partner of the partnership will normally dis-solve the partnership unless other provision is made in the partner-ship agreement. However, as a limited company may be a partner in ageneral partnership it is still possible to limit liability.

§ 11:75 General partnerships—Management andrepresentation

Every representation made by a partner either orally or in writingor by conduct to any third party in relation to the business matters ofthe partnership and in the ordinary course of his business can be usedas evidence against or may be deemed to bind the partnership. Aparty that is aware that a partner is acting beyond his powers aspartner cannot rely on his representations to bring a claim againstthe partnership.

Any partner may take part in the management of the partnership,subject to the provisions of any partnership agreement. It is generallyaccepted that any disagreements regarding specific issues or mannerin which the business is being run may be settled by a decision of themajority of partners. However, it is not possible to change the generalnature of the business of the partnership without the unanimous deci-sion of all the partners.

§ 11:76 General partnerships—Profit and losses

Unless a partnership agreement provides otherwise, all partnersshare equally in the capital and profits of the partnership businessand contribute equally to losses sustained by the partnership.

The partnership is obligated to reimburse any partner who sustainsexpenses on behalf of the partnership during the ordinary course ofhis business or in relation to anything done to protect the business orthe property of the partnership.

§ 11:77 General partnerships—Termination

A partnership may be dissolved in one of the following five ways:

1. Upon the expiration of a fixed term, where the partnership wasformed for a fixed term of time;

2. Upon the completion of a certain transaction, where the partner-ship was formed to complete a certain transaction;

3. By a partner giving notice of his desire to dissolve the partner-ship, if the partnership was formed for an indefinite period;

4. Subject to any provisions in the partnership agreement, uponthe death or bankruptcy of any partner; and

5. Upon petition to the court by any partner for the dissolution ofthe partnership according to the provisions of the Law.



§ 11:78 General partnerships—Liability of partners

Generally speaking, the liability of partners in a general partner-ship is unlimited. Each partner is liable jointly with the other partnersfor all debts and obligations of the firm incurred while he or she is apartner. Therefore, any debts and liabilities not satisfied by the assetsof the firm will be paid by the partners individually. In the event of apartner’s death, the partner’s estate is liable for the dead partner’sshare of the debts of the partnership.

As noted above, a limited company may be a general partner in apartnership. A person admitted to partnership in an existing firm isnot liable for any debts incurred prior to the date of his admission.When a partner retires, his liability persists in relation to the debts ofthe partnership that existed up to the date of his retirement.

§ 11:79 Limited partnerships—Formation

A limited partnership consists of at least one general partner andother limited partners. A limited partnership is formed in exactly thesame way as a general partnership except that the declaration signedby the partners and filed with the Registrar must contain a statementthat the partnership is a limited partnership and the amount that hasbeen contributed by each limited partner and whether the said amountwas paid in cash or otherwise.

§ 11:80 Limited partnerships—Liability and bankruptcy

A limited partner cannot render the limited partnership liable forhis representations. A limited partner is not liable for any debts orobligations of the limited partnership beyond the amount of his con-tribution to the partnership. Subject to any contrary provision in thepartnership agreement, the bankruptcy of a limited partner will notdissolve the partnership.

§ 11:81 Limited partnerships—Management andrepresentation

A limited partner cannot partake in the management of thepartnership. A limited partner has the right to inspect the books andrecords of the partnership and to consult with the other partners onthe business and prospects of the partnership.

Subject to the provisions of any partnership agreement, any dis-agreement over the running of the affairs of the partnership is to besettled by a decision of the majority of general partners. A person maybe appointed partner without the consent of the limited partners. Asnoted above, a limited partner cannot make a limited partnership li-able for his representations to third parties.

§ 11:82 Limited partnerships—Profit and losses

Generally speaking, partners are free to determine how profits and


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losses shall be distributed among the partners on the basis of thepartnership agreement. Where the agreement is silent, the limitedpartner may be expected to share in such profits and losses in propor-tion to his contribution to the partnership.

§ 11:83 Limited partnerships—Termination

A limited partnership may be dissolved in the same way by the gen-eral partners as is the case in general partnerships. A limited partner-ship shall not automatically be dissolved by reason of death or bank-ruptcy of a limited partner and a limited partner cannot dissolve thepartnership by giving notice to the other partners.

§ 11:84 Limited partnerships—Liability of partners

In a limited partnership, general partners are liable for all thedebts and obligations of the partnership while the limited partnersare only liable for the amount they contribute to the limitedpartnership. If a limited partner participates in the control or manage-ment of the business, he or she risks losing limited liability protection.

XVI. CIVIL ACTIONS AND PROCEDURES

§ 11:85 General description of court system

There are two tiers of courts in Cyprus, the Supreme Court and thesubordinate courts. The Administration of Justice (Miscellaneous Pro-visions) Law of 1964 merged the Supreme Constitutional Court andthe High Court set up under the Constitution into one court called theSupreme Court.

The Supreme Court consists of 13 members (judges), one of whom isPresident. The Supreme Court exercises both appellate civil and crim-inal jurisdictions. The Supreme Court is vested with authority as:

1. The Supreme Constitutional Court;2. An Admiralty court;3. An Appellate court; and4. A court with exclusive jurisdiction to issue prerogative writs

(e.g. habeas corpus, mandamus, prohibition, quo warranto andcertiorari).

Until 2015 the Supreme Court was also the Administrative Court,having exclusive jurisdiction to adjudicate administrative recoursesunder Article 146 of the Constitution. However, in 2015 this jurisdic-tion was transferred to a newly-formed Administrative Court.

There are six types of subordinate courts in Cyprus. These are theDistrict courts, the Assize courts, the Family Courts, the Labor courts,the Rent Control courts and the Military courts.

There exist five District courts which exercise civil and criminaljurisdiction. In its civil jurisdiction, a District court can entertain any



action whose cause arose within its district. When exercising criminaljurisdiction, the District courts can adjudicate on any criminal offensecommitted within their districts, which has not been specifically as-signed to the jurisdiction of the Assize courts and where the statutorypunishment for the offences in question does not exceed five years.

The Assize courts are vested with unlimited jurisdiction to try allcriminal offenses and to impose punishment provided by the law.

The judges of the Supreme Court are appointed by the President ofthe Republic, usually from the ranks of existing judges or frommembers of the legal profession. The judges of the subordinate courtsare appointed by the Supreme Court from the ranks of lawyers inprivate practice or from members of the Attorney-General’s Officeprovided they have practiced law for at least 5 years.

§ 11:86 Jurisdiction of courts

The Supreme Court and the subordinate courts have jurisdiction(subject to their own jurisdictional limitations) to hear and try any ac-tion in personam where the defendant is served with a writ or otheroriginating process in the manner prescribed by the Rules of Court orwhere the defendant submits to the jurisdiction of the court.

The service of the writ or other originating process not only notifiesthe defendant of the action brought against him but also establishesthe jurisdiction of the Cypriot courts over the defendant.

Leave of the court is needed before service can be affected ondefendants who are not resident in Cyprus. The grounds for an ap-plication for leave to serve a notice of the writ of summons outside thejurisdiction are set out in the Rules of Court.

§ 11:87 Parties to lawsuit

It is important to join the right parties in any legal action as theremedies granted by the courts are generally only effective as betweenthe parties. Although it is possible to correct mistakes by amendmentat a later stage, the expiry of a limitation period may prevent this.

Persons under a disability, such as minors and mental patients,must sue through a next friend and be sued through a guardian. Gen-erally, causes of action other than defamation survive a plaintiff’sdeath. A deceased defendant’s personal representatives may beordered to be made parties to the action.

Unincorporated associations have no separate legal personality andcannot be parties to proceedings in their own right. Where proceed-ings are necessary, they are usually brought by or against an individ-ual member or members.

§ 11:88 Depositions

Depositions or affidavits are written statements of a witness made


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on oath. Affidavits are, in practice, prepared by a lawyer based on in-formation provided by the witness. Their purpose is to place wit-nesses’ evidence before the court in a convenient form. An affirmation(e.g. for agnostics or atheists) is the equivalent of an affidavit wherethe witness affirms the evidence rather than swearing to it.

Affidavits may be used in support of any interlocutory proceedingscommenced by a writ or in proceedings commenced by originatingsummons or by petition. Affidavits must be expressed in the firstperson and be divided into numbered paragraphs.

Any document or thing used in conjunction with an affidavit mustbe made an exhibit to it. Affidavits may be sworn before a Court Reg-istrar or before a Cypriot consular officer.

§ 11:89 Discovery

The purpose of discovery is to make available to the parties alldocuments relating to matters in issue. Subject to claims for privilegeand admissibility, each party is able to use such documents to supporttheir case. A claim for privilege may be made if the documents areconfidential communications between lawyer and client for thepurposes of litigation. Documents that tend to self-incriminate andprivileged documents cannot be inspected.

§ 11:90 Statutes of limitations

In Cyprus, as with most common law jurisdictions, claims and rightsof recourse to the courts are normally subject to extinction by statu-tory time-barring. Law Number 66(I) of 2012 provides that the limita-tion period in respect of a claim commences from the day of comple-tion of the basis of the claim (defined as all events that give rise to anactionable right concerning a claim) and stipulates that unlessotherwise provided in the Law or any other law, no proceedings maybe issued after 10 years have elapsed from that date.

Secured Loans

For loans secured by a mortgage, charge, or pledge, the limitationperiod is 12 years.

Civil Wrongs

The general limitation period for civil wrongs is six years. Thelimitation period for claims for damages for negligence, nuisance orbreach of a statutory duty is three years. The court has discretion todisapply the limitation provisions in the case of civil wrongs leadingto bodily harm or death.

The court cannot exercise its discretion to disapply the limitationperiod once two years have elapsed from the expiry of the prescribedlimitation period. The limitation period is one year in the case ofproceedings for defamation or malicious falsehood.



Contracts

There is a general limitation period of six years for actions based oncontractual claims. However, for proceedings related to a contract orto a quasi-contract in relation to an agreed or reasonable remunera-tion of a lawyer, a doctor, a dentist, an architect, a civil engineer, acontractor, or other independent professional, the limitation period isthree years.

For loans with no set repayment date and which do not requireadvance notice as a condition of repayment of the debt, the limitationperiod commences on the date of service of written notice to the bor-rower to repay the debt, from, or on behalf of, the lender (or wherethere are co-lenders, from or on behalf of one of them).

Succession

No action can be commenced questioning the validity of a will, or inrelation to the estate of a deceased or any portion or part thereof orbequest, after eight years from the date of death.

In the event that the claimant was absent from Cyprus the limita-tion period will not be deemed to have been completed unless one yearhas elapsed from the time that the claimant returned to Cyprus orbecame aware of the death (or with reasonable diligence could havebecome aware of the death).

Specific Exceptions

The Law provides that the period of limitation will not commenceor, if it has commenced, will be suspended, in respect of the following:

1. Between spouses during their marriage, even though the mar-riage is later annulled;

2. Between parents and children while the children are minors;3. Between trustees and trust beneficiaries while the trust benefi-

ciaries are minors or, when the beneficiary has not yet beenborn, until the beneficiary is born and reaches adulthood;

4. Between executors of a will or administrators of the property ofa deceased and heirs and legatees of the deceased while theheirs and legatees are minors; and

5. Between cohabiting partners.

XVII. RECOGNITION OF FOREIGN JUDGMENTS

§ 11:91 Enforceable judgments

There is no unified system in Cyprus for the enforcement of foreignjudgments. A judgment of a foreign court has no direct operation inCyprus but may be enforceable by action at common law or understatute. A foreign judgment may be enforceable under statute by theprocess of direct registration, while a judgment creditor wishing toenforce a foreign judgment at common law must bring an action onthe foreign judgment.


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By virtue of EC Regulation 1215/2012 on jurisdiction and the recog-nition and enforcement of judgments in civil and commercial matters,a judgment of a court of any EU member state can be enforced in an-other member state on application by any interested party to thecourts of that other member state. Therefore, judgments of courts ofother EU member states can be enforced in Cyprus by direct registra-tion of said judgments, subject to any applicable formalities and rele-vant civil procedure rules. Regulation 805/2004 provides a parallelstreamlined enforcement mechanism for uncontested claims.

A foreign judgment may be enforced under statute by a process ofdirect registration. This system, if applicable, will result in practicallyall foreign judgments being treated as judgments of the Cypriot courtsand having direct operation in Cyprus. In order for the system ofdirect registration to be applicable, either a bilateral treaty must existbetween Cyprus and the country in which the foreign judgment wasissued concerning the mutual enforcement of foreign judgments or amultilateral treaty must exist concerning the enforcement of foreignjudgments where Cyprus and the country in which the judgment wasmade are signatories and the treaty is in force.

The prevailing attitude of the Cypriot courts is to assist in theenforcement of foreign judgments, provided that the following require-ments are satisfied:

1. The foreign judgment has been issued by a court which hasjurisdiction in accordance with Cypriot rules concerning theconflict of laws;

2. The enforcement of the foreign judgment will not injure Cypriotpublic policy;

3. The foreign judgment has been reached on merit and not ac-cording to procedure;

4. The foreign judgment has not been obtained by fraud; and5. The proceedings which led to the issue of the foreign judgment

were not contrary to natural justice.

§ 11:92 Formal requirements of foreign judgment

Formal requirements of a foreign judgment are discussed in § 11:91,supra.

§ 11:93 Procedure for enforcement of foreign judgment

A judgment creditor seeking to enforce a foreign judgment at com-mon law must bring an action on the foreign judgment. As soon as theaction is filed, usually by a specially endorsed writ with a statementof claim setting out the details of the judgment sought to be enforced,the judgment creditor may apply for summary judgment under Order18 of the Civil Procedure Rules on the ground that the defendant hasno defense to the claim: if the application is successful, the defendant



will not be allowed to defend. It should be noted that where the foreignjudgment is enforceable by registration, the courts will not allow anaction to be brought at common law.

The court may give leave to the defendant to defend his case at thehearing of the application for summary judgment. In this event, thecourt will give directions for the trial of the action. There will be anexchange of pleadings and the action will proceed to trial where thecourt will decide summarily on the merits of the action.

Where the system of statutory registration of a foreign judgment isapplicable, an application for registration of the judgment may bemade if:

1. The judgment is final and conclusive between the parties;2. There is a sum of money payable under it which is not for tax or

in respect of a fine or a penalty;3. The application is made within 6 years of the judgment being

given or an appeal adjudged;4. The judgment is unsatisfied, at least in part; and/or5. The judgment is capable of execution in the original foreign

court.

A judgment creditor may petition the court to have the judgmentregistered in the District court in whose area the debtor resides orwhere any property to which the judgment relates is situated. The pe-tition must be supported by an affidavit and an exhibit of a certifiedcopy of the original judgment of the foreign court together with a cer-tified translation in Greek of the foreign judgment.

Once the prerequisites have been satisfied, the court may give leaveto register the judgment where the judgment is drawn up and onwhich a period is stated allowing the judgment debtor to apply tohave the registration set aside. The order must contain a period ofnotification and execution of the judgment may not be issued until af-ter the expiration of that period.

XVIII. WRITS OF EXECUTION

§ 11:94 Courts which have the power to issue writs ofexecution

A monetary judgment issued by any civil court is enforceable by awrit of execution. A writ of execution is a document issued by or underthe authority of a court and directed to the official responsible forenforcement of court orders, called a sheriff or court bailiff, authoriz-ing the official to seize and sell (usually by auction) property belong-ing to the judgment debtor in order to satisfy the judgment of thecourt.

§ 11:95 Execution procedure

In relation to a writ of execution by sale of movable property (per-


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sonalty) of the judgment debtor, the following procedure is followed.The court sheriff must execute the writ between the hours of sunriseand sunset and may seize only that quantity of personal property ofthe judgment debtor which the sheriff considers necessary to satisfythe judgment debt. The property seized may not be sold until afterthree days from the date of its seizure and must, in the meantime, bestored in an appropriate place or kept under the care of an appropri-ate person. The property seized is normally sold by auction unless thecourt that issued the writ considers it expedient to use some othermethod and so orders.

A writ of execution by sale of immovable property may not be issuedunless a writ of execution for the sale of movable property has beenfirst issued and either returned unexecuted or if executed has notcompletely satisfied the judgment debt or if the judgment debtor hasconsented to the writ. No writ of execution for the sale of immovableproperty can be issued without a prior application to such effect to thecourt, service of the application on the judgment debtor and thesignature of the judge making the said order. Once the writ is issuedby the court, the property in question will be sold by public auctionsubject to the requirement of prior public notice being given.

The public notice must be affixed in the town or village where theproperty is located, in the town or village where the auction is to takeplace, in the district courthouse and anywhere else the court mayorder. The notice must state the name of the auctioneer and the nameof the person who is authorized to receive bids from interested parties.The notice must allow for a 15 to 90-day period between its publica-tion and the date of auction to be considered valid. The personresponsible for receiving the bids may receive written bids before thedate of the auction or oral bids on the date of the auction. The prop-erty is sold to the highest bidder. The court may set a reserve pricefor the property, below which any bid will not be accepted. If it doesso, the reserve price must be stated in the public notice.

§ 11:96 Assets affected

All personal property and assets of the judgment debtor, except thatexpressly excluded by the operation of law (see § 11:97 below), issubject to execution. In relation to immovable property, all propertyregistered in the name of the judgment debtor in the local DistrictLand Registry Office is subject to execution, except that propertywhich is expressly excluded by the operation of the Law.

§ 11:97 Assets exempt from execution

According to the Civil Procedure Law, in relation to writs of execu-tion for the sale of movable property, the following personal propertyis exempted:

1. The required clothing, linen, beds and mattresses of the judg-ment debtor and his family;



2. The necessary utensils and other items required for cooking bythe judgment debtor and his family, as well the television, radio,refrigerator, washing machine, electrical or gas kitchen, andany other item required for the studies of the judgment debtor’schildren;

3. Books, tools, equipment, machinery, vessels and any other itemsconsidered to be necessities for the judgment debtor’s occupa-tion, art, craft or industry with an aggregate value not exceed-ing EUR 10,000;

4. Where the judgment debtor is a farmer, farming equipment oranimals with an aggregate value not exceeding EUR 20,000;

5. Any item which is necessary for the use of animals or mechani-cal farming equipment;

6. Animal feed for six months for the above-excluded animals;

7. Supplies for three months for the judgment debtor and his fam-ily;

8. When the judgment debtor is a farmer, sufficient seed for thesowing of the farmer’s property normally cultivated by him forone year’s cultivation;

9. Lowest value motor vehicle necessary for transport needs ofdebtor and his family, or for his work.

In relation to writs of execution for the sale of immovable property,the following assets are excluded by the Civil Procedure Law:

1. Immovable property which is used either partly or entirely asthe dwelling of the judgment debtor and his family but only tothe extent required for their proper housing;

2. Where the judgment debtor is a farmer, so much land as isrequired for the feeding and/or maintenance of the judgmentdebtor and his family.

XIX. ATTACHMENTS

§ 11:98 Property subject to attachment

The Law concerning attachments is governed in Cyprus by Order43 of the Civil Procedure Rules and Part 7 of the Civil Procedure Law.These proceedings are commonly known as garnishee proceedings.

According to the governing Law, property that may be made subjectto an attachment order includes any amount of money, goods or mov-able property in which a judgment debtor has some beneficial interestand which is under the safekeeping or control of some third party.Where the third party is a debtor of the judgment debtor, the judg-ment creditor may seek an order for this third party to be summonedto court and investigated for property which may be attached for sat-isfaction of the judgment debt.


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§ 11:99 Types of claims that are the basis for attachment

Any claim involving any amount of money owed by the judgmentdebtor to the judgment creditor and all debts owing or accruing fromany third party (garnishee) to the judgment debtor may be attachedby the judgment creditor.

To be capable of attachment, there must be in existence, at the datewhen the attachment becomes operative, something which the lawrecognizes as a debt and not merely something which may or may notbecome a debt. So long as there is a debt in existence, it is not neces-sary that it be immediately payable.

§ 11:100 Attachment procedure

The judgment creditor makes an application to the court for an or-der to have the garnishee appear before the court and be examined inrelation to the property of the judgment debtor he may have in hispossession as specified in the order and also for the garnishee not torelinquish the safekeeping of the property in question.

The court may make any further order it deems appropriateconcerning the safe keeping of the property in question after service ofthe garnishee order on the garnishee. Once the court has heard allinterested parties at the appointed date of the hearing of the attach-ment order, it may order any sum of money attached to be paid overto the judgment creditor or any other property attached to be sold tothe extent required to satisfy the judgment debt and the proceeds ofsale or the required money to be paid over to the judgment creditor.

XX. ARBITRATION

§ 11:101 Selection and appointment of arbitrators

Arbitration in Cyprus is governed by the Arbitration Law of 1960(Cap. 4) which defines that an arbitration agreement as any writtenagreement between two or more contracting parties to have anydispute referred to an arbitrator irrespective of whether he or she isnamed in the agreement.

The arbitrator(s) may be appointed either by the express agreementof the contracting parties who wish to refer their dispute to an arbitra-tor for resolution pursuant to an arbitration agreement or by appoint-ment by court order. The Law provides that, in the following cases, acourt may order the appointment of an arbitrator:

1. Where the arbitration agreement provides for the appointmentof a single arbitrator and the contracting parties are unable toagree on the arbitrator;

2. Where the appointed arbitrator is unable or unwilling toperform his duties and the contracting parties are unable to ap-point an arbitrator;



3. Where the contracting parties or two arbitrators are free to ap-point a third arbitrator and they fail to do so; and/or

4. Where the third arbitrator so appointed is unable or unwillingto perform his duties and the contracting parties or two arbitra-tors fail to appoint a replacement.

In the above cases, a contracting party may serve written notice tothe other contracting parties or to the arbitrators, as the case may be,concerning the appointment of an arbitrator and if an appointment isnot made within seven days of service, the court may order such anappointment following an application from the interested contractingparty.

§ 11:102 Enforcement of arbitral awards

The Arbitration Law provides that an arbitration award or decisionmay, with leave of the court, be executed or enforced in the samemanner as a court judgment or order and in such an instance a courtjudgment may be filed containing the same wording or contents of thearbitral award.

§ 11:103 Appeal from awards

Generally speaking, an arbitral award is deemed to be final and noappeal will lie therefrom. However, the Law provides that the courthas the power to order that an arbitration agreement and the awardmade under it will cease to have effect or may give leave for its revo-cation where the impartiality of the arbitrator is successfully chal-lenged or the dispute referred thereto involves a question of fraud.Furthermore, the court may refer back to the arbitrator(s) any matterraised in the arbitration for reconsideration.

§ 11:104 International commercial arbitration

Foreign arbitration awards are enforceable on the basis of the Lawon International Arbitration (Law 101 of 1987) and the Convention onthe Recognition and Enforcement of Foreign Arbitral Awards of theUnited Nations of 1958 (“the New York Convention”). As a contract-ing state, Cyprus is bound to enforce awards made in foreign stateswhich are contracting parties to the New York Convention.

The most important aspect of the Law on International Arbitrationis that the intervention of the courts is limited to a few specifiedinstances. Prior to the delivery of the award, these instances are:

1. Where the court appoints an arbitrator if one of the parties orthe party-appointed arbitrator fails to do so;

2. Where the tribunal dismisses a challenge against an arbitrator,the court will deal with the challenge;

3. Where the court decides to terminate an arbitrator’s mandate if


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he fails to discharge his duties or is guilty of undue delay in do-ing so; and/or

4. Where the court reviews a ruling by the tribunal concerning thetribunal’s jurisdiction in the matter.

After delivery of the award, a court may set aside an award or re-fuse to recognize it or enforce it on the following grounds:

1. Incapacity of the parties;2. Invalidity of the arbitration agreement;3. Lack of proper notice or denial of natural justice;4. Lack of jurisdiction of the tribunal;5. Defective composition of the tribunal;6. The subject matter of the dispute not being capable of settle-

ment by arbitration under the law if Cyprus; and/or7. The award is contrary to Cypriot public policy or public order.

Provided that the Cypriot courts recognize the validity of the foreignarbitration award, all the methods of execution normally available forCypriot court judgments are available for the execution of foreignarbitration awards.

XXI. BANKRUPTCY AND CREDITORS’ RIGHTS

§ 11:105 In general

Generally speaking, under Cyprus Law the term “bankruptcy” refersto the process of declaring an individual who has incurred debts andis unable to pay those debts bankrupt, and ultimately to release himfrom the debts after distributing the proceeds of such assets as he hasbetween his creditors. The term “insolvency” is used to refer to thecorresponding procedure where the debtor is a company or legalperson.

Bankruptcy of individuals is regulated by the Bankruptcy Law andcorporate insolvency is governed by the provisions of the CompaniesLaw. What follows below is a discussion of the provisions of the Bank-ruptcy Law unless otherwise stated.

§ 11:106 Distinction between bankruptcy and composition

Bankruptcy is a form of universal succession by which the assets ofan insolvent debtor are made available to his creditors. Bankruptcy isgoverned by the provisions of the Bankruptcy Law. Bankruptcyproceedings can commence only if the debtor has committed one of thefollowing “acts of bankruptcy:”

1. Where the debtor fraudulently transfers, donates, delivers orgrants all his property or part of it;

2. Where the debtor transfers, pledges or mortgages his propertyor part of it and this act would be considered void as a fraudu-lent preference if the debtor was declared bankrupt;



3. Where an order for a writ of attachment of the debtor’s movablesis issued against him ordering their sale;

4. Where the debtor testifies in court and states his inability topay his debts or files his own application (“petition”) for bank-ruptcy;

5. Where a creditor obtains a final judgment against the debtor ororder for payment of any amount and a notice of bankruptcy isserved on the debtor;

6. Where a debtor fails to pay or settle his debts in accordancewith a court order; and/or

7. Where a Personal Repayment Plan has failed or been terminatedin accordance with the Bankruptcy of Natural Persons (PersonalRepayment Plans and Debt Relief Order) Law.

Composition involves a debtor, against whom a receiving order (see§ 11:111 below) has been made, putting forward a proposal for thesettlement of his debts. The proposal must be submitted within fourdays of the submission by the debtor of his written statement of af-fairs or within any other time period prescribed by the OfficialReceiver. The Official Receiver must convene a meeting of the debtor’screditors to decide on whether to accept the proposal or not to acceptit.

A majority of three-quarters in value of the creditors with provendebts present and voting is required for acceptance of the proposal. Inthe event that it is accepted, it binds all creditors subject to ratifica-tion by the court. If the proposal is rejected or no decision is madewithin 14 days following the debtor’s public examination, the courtwill declare the debtor bankrupt and his property will then bedistributed among his creditors.

New provisions introduced in 2015 give the court the power to ordera 95-day moratorium on enforcement actions by creditors in order togive the debtor time to agree to an arrangement (a “Personal Repay-ment Plan”) with them. If approved by a specified statutory majorityof creditors in value and by the court, the arrangement (deemedconsensual) will be binding on the debtor and all creditors. Any dis-senting creditors will have the right to be heard by the court. Insmaller bankruptcies the court has the power to impose a reschedul-ing (where a consensual personal repayment plan has not been ap-proved by majority of creditors), provided that the following condi-tions are satisfied:

1. The aggregate liabilities are no more than €350,000;2. The primary residence of the individual was bought for less

than €300,000 and is mortgaged in favor of at least one of thecreditors;

3. The total value of the remaining assets does not exceed€250,000;

4. The individual debtor has complied with all his tax obligations


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to the tax department or the tax department has consented tothe submission of a personal repayment plan by the debtor; and

5. The inability to pay debts is due to a deterioration of the debt-or’s financial situation as a result of events outside his or hercontrol, leading to a diminution of income of 25% or more.

In addition, individuals with minimal assets and income (assets notgreater than €1,000 and a net monthly income not exceeding €200)may apply to the court via the government insolvency service for an“order for debt relief” of up to €25,000.

§ 11:107 Entities subject to bankruptcy

Any entity can be subject to bankruptcy proceedings under theBankruptcy Law subject to the requirement of court jurisdiction andthat the debtor has committed an act of bankruptcy. A legal person orcorporation is normally subject to insolvency proceedings under theprovisions of the Companies Law.

§ 11:108 Reorganization

A reorganization is a process by which some compromise agreementmay be reached between a debtor and his creditors and is consideredto be an alternative to bankruptcy. In relation to individuals or natu-ral persons, this topic has been covered above, in § 11:106.

In relation to the reorganization of corporations, section 198 of theCompanies Law provides a method whereby a compromise or arrange-ment may be made between a company and its creditors.

A scheme under section 198 requires the sanction of the court andmay be applicable to both a going concern as well as a company in theprocess of winding up. The usefulness of the sanction is in that itenables a company to agree a compromise with a majority of its credi-tors which can then be imposed on all its creditors.

An application may be made by summons to the court to have ascheme under section 198 approved. In deciding whether to exerciseits jurisdiction and sanction the scheme, the court will normally needto be satisfied of the following matters:

1. The provisions of the Companies Law have been complied with;2. The class of creditors has been fairly represented; and3. The arrangement must be such as a man of business would rea-

sonably approve.

In 2015, in order to promote a rescue culture, the Companies Lawwas amended to introduce a process called “examinership.” It providesfor the appointment of an insolvency practitioner as “examiner,” whoserole is to develop restructuring proposals during a four monthmoratorium in which the company is protected from creditor action,and place them before creditors and members for approval. It should



be noted in passing that Cyprus taxation law contains advantageousprovisions relating to corporate reorganizations, which are generallyexempt from tax.

§ 11:109 Court’s jurisdiction

The Cypriot courts have jurisdiction to adjudicate bankrupt anydebtor who at the time when an act of bankruptcy was committed,was:

1. Personally present in Cyprus;2. Ordinarily resident or had a residence in Cyprus;3. Carrying on business in Cyprus personally or by means of an

agent or manager; or4. A member of a firm or partnership which carried on business in

Cyprus.

§ 11:110 Petition for bankruptcy

Bankruptcy proceedings start with the filing of a written bank-ruptcy petition to the court. The petition may be filed by a creditor orby the debtor himself. A creditor’s petition must be filed within sixmonths of the alleged act of bankruptcy. If a creditor wishes to file abankruptcy petition, he must meet the following conditions:

1. The debt due to the creditor applicant or, if two or more of thecreditors apply in one petition, the total debts owed to allpetitioners must add up to at least EUR 854;

2. The debt is a liquidated sum payable either immediately or at aspecified time;

3. The debtor is a resident of Cyprus or had his usual place of res-idence in Cyprus for the year before the filing of the petition orcarried on business directly or through a representative.

It should be noted that a debtor’s petition for bankruptcy will onlybe valid if total debts exceed EUR 15,000 and if these debts are forliquidated sums, are unsecured, and payable immediately or on speci-fied dates.

§ 11:111 Procedural steps in bankruptcy

The effect of a bankruptcy order is to vest the debtor’s property inthe hands of the Official Receiver, who will hold it until a trustee inbankruptcy is appointed. The trustee may be one of the creditors or aperson appointed by the creditors or the Official Receiver himself. Thetrustee will distribute the assets of the debtor according to the rulesof bankruptcy. Following the trustee’s appointment, the trustee hasthe following powers to deal with the bankrupt’s property:

1. Sell all or any part of the property by public auction or privatecontract, with power to transfer the whole of the property toany person or corporation or to sell it in parts;


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2. Give receipts for money received by him, which receipts shalldischarge the person who pays the money from all responsibil-ity arising from the petition;

3. Prove, rank, claim, and draw a dividend in respect of any debtdue to the bankrupt; and

4. Exercise and execute any powers of attorney, deed, and otherinstruments for the purpose of carrying into effect the provi-sions of this Law.

Once a bankruptcy order is made, and after the examination of thebankrupt’s affairs is concluded, the bankrupt may apply to court forhis discharge. This releases him from all provable debts and liabilities,but not from any unproven liabilities such as claims for generaldamages. In deciding whether to grant or refuse an application thecourt will examine the Official Receiver’s report relating to the debt-or’s conduct and his affairs and may discharge the debtor or suspendthe discharge. Discharge with respect to all provable debts and li-abilities is automatic after three years, on the condition that all thebankrupt’s undistributed property, both movable and immovable,remaining after said discharge is sold and the proceeds distributed tosatisfy any remaining debt to his creditors.

XXII. ONLINE RESOURCES

§ 11:112 Elias Neocleous & Co LLC

The website of Elias Neocleous & Co LLC, author of this Chapter onthe Commercial Laws of Cyprus, may be found at the following web-address: www.neo.law.

§ 11:113 Other legal resources—Cyprus government websites

The following are links to specific government ministries and othergovernment departments which have information that may be ofinterest—e.g. legislation, regulations, treaties, etc.:

1. Official website of the Republic of Cyprus: http://www.cyprus.gov.cy;

2. Ministry of Foreign Affairs: http://www.mfa.gov.cy;3. Ministry of Finance: http://www.mof.gov.cy;4. Statistical Service: http://www.mof.gov.cy/cystat/statistics.nsf;5. VAT Service: http://www.mof.gov.cy/mof/vat/vat.nsf;6. Department of Customs and Excise: http://www.mof.gov.cy/mof/

customs;7. Department of Registrar of Companies and Official Receiver: ht

tp://www.mcit.gov.cy/drcor;8. Ministry of Transport Communications and Works: http://ww

w.mcw.gov.cy/mcw;9. The Department of Merchant Shipping: http://www.shipping.go

v.cy; and



10. The official website of the Cyprus Legislature: http://www.parliament.cy.

§ 11:114 Other legal resources—Other Cypriot websitescontaining useful information

1. Cyprus Bar Association: http://www.cyprusbarassociation.org/eng/index_en;

2. University of Cyprus: http://www.ucy.ac.cy;3. Cyprus Stock Exchange: http://www.cse.com.cy;4. Cyprus Securities and Exchange Commission: http://www.cysec.g

ov.cy;5. Leginet (on-line portal for legislation/caselaw-subscription

required): http://www.leginetcy.com;6. CyLaw (on-line portal for Cyprus legislation/caselaw-no subscrip-

tion required): http://www.cylaw.com; and7. Cygazette (on-line edition of the Official Government Gazette): htt

p://www.cygazette.com.cy.

§ 11:115 Other legal resources—Foreign websites containinginformation on Cyprus

1. CIA World Factbook: http://www.odci.gov/cia/publications/factbook/geos/cy.html;

2. Tradeport Country Library: http://www.tradeport.org.cy/ts/countries/cyprus/o1grw.html;

3. The Library of Congress Country Studies: http://www.lcweb2.loc.gov/frd/cs/cytoc.html;

4. CountryWatch: http://www.countrywatch.com; and5. RefDesk.com: http://www.refdesk.com.


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APPENDIX 11A

Employment Contract

EMPLOYMENT CONTRACT

THIS AGREEMENT IS MADE this . . . . . . . . . . day of . . . . . . . . . . 20 . . .

BETWEEN (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(hereinafter the “Employer”)

and

(2). . . . . . . . . . . . . . . . . . . . . .of. . . . . . . . . . . . . . . . . . . . . .

hereinafter the “Employee”)

This Agreement sets out the terms and conditions of employment andgenerally all the information which is required to be given to the Em-ployee under Law 100(I)/ 2000 as at the date hereof.

1. COMMENCEMENT AND JOB TITLE1.1. The Employer agrees to employ the Employee from

. . . . . . . . . . . . . . . . . . . . . . 20 . . . (the “Commencement Date”) in the capa-city of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.2. The Employee shall initially be employed at the Employer’smain office/ premises in Cyprus. However, the Employer reserves theright to second and/or relocate the Employee to any location in any ofthe countries in which the Employer or its affiliated companies currentlyoperate (or in the future may operate).

1.3. Both parties acknowledge that the Employer’s business inCyprus will expand and that new stores/ offices/ premises may beopened and/ or operated by or on behalf of the Employer after the dateof commencement of this Agreement. It is understood that for theproper performance of the Employee’s duties and responsibilities underthis Agreement the Employee will be responsible for any stores/ offices/premises which may be opened and/ or operated by or on behalf of theEmployer after the date of commencement of this Agreement as maybe designated by the Employer from time to time.

1.4. No employment with a previous employer will be counted aspart of the Employee’s period of continuous employment with theEmployer.


2. PROBATION PERIOD

The Employee’s employment hereunder is subject to a probation periodof 6 months from the Commencement Date (the “Probation Period”),during which the Employee may be dismissed by the Employer for anyreason whatsoever, with or without cause and notice and without beingsubject to any disciplinary and/ or grievance procedures of the Employer.

3. SALARY3.1. The Employer shall pay the Employee total salary of

. . . . . . . . . . . . . . . . . . . . . . gross per year, payable at monthly intervals on orbefore the last day of each month.

3.2. The Employee’s salary shall be paid net of any national insur-ance contributions, fees impositions or taxes.

3.3. Except where the law requires otherwise, the Employee shallbear sole responsibility for any liability to tax (in any country) on pay-ments made to him/her under this Agreement.

3.4. The Employer shall review the Employee’s salary at suchintervals as it shall at its sole discretion decide.

4. HOURS OF EMPLOYMENT4.1. The Employee’s normal working hours shall consist of 48 hours

per week, but the Employee hereby recognizes that the needs of his/her position may require more working hours and hereby consents toworking any such hours as may reasonably be required from him/herto meet the requirements of the Employer’s business.

4.2. The Employee shall normally work 6 days per week. The Em-ployee may take up to 1 hour break for lunch every full working day.

4.3. The Employee may from time to time be required by theEmployer to work such days and/or such times and/or such additionalhours to meet the requirements of the Employer’s business. The Em-ployee will not be entitled to receive any overtime payment or ad-ditional remuneration in relation to such work.

5. HOLIDAYS5.1. The Employee shall be entitled 20 days’ holiday per calendar

year at full pay in addition to official public holidays. Holidays must betaken at times convenient to the Employer, and the Employee mustgive his/her supervisor at least 28 days’ prior notice of intention to takea holiday. Holidays cannot be carried over into the subsequent holidayyear.

5.2. The Employee shall be entitled to payment in lieu of any holidayentitlement accrued due but not taken at the date of termination of his/her employment. If at the date of termination the Employee has takenholiday in excess of his or her accrued entitlement a correspondingdeduction will be made from his/her final payment.

5.3. The Employee shall not be entitled to take any holidays duringthe Probation Period.

App. 11A DIGEST OF COMMERCIAL LAWS OF THE WORLD

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6. COLLECTIVE AGREEMENTS

There are no collective agreements in force directly relating to the termsof your employment.

7. TERMINATION7.1. The Employer may terminate this Agreement in any event where

the Employee is subject to dismissal, with or without notice, in accor-dance with applicable law.

7.2. Without limitation to the generality of clause 7.1, the Employermay terminate this Agreement by giving written notice to the Employee

in any of the following cases:(a) where the Employee does not perform his duties in a rea-

sonably satisfactory manner;(b) where the Employee has been made redundant; or(c) for reasons of force majeure, act of war, civil commotion,

act of God, destruction etc.7.3. Where the Employer terminates this Agreement pursuant to

clause 7.2, it will give written notice to the Employee of the reasons for

dismissal as follows:(a) not less than one week’s notice during the first year of

continuous employment;(b) not less than two weeks’ notice during the second year of

continuous employment;(c) not less than four weeks’ notice during the third year of

continuous employment;(d) not less than a further one week’s notice for each full year

of continuous employment after the fourth year until the sixthyear of continuous employment; and

(e) not less than eight weeks’ notice after six years of continu-ous employment.

7.4. Without limitation to the generality of paragraph 7.1 above, theEmployer may terminate this Agreement without notice in any of the

following cases:(a) where, during the performance of his duties, the Employee

displays serious or persistent misconduct;(b) where, during the performance of his duties, the Employee has

committed a serious criminal offence, has demonstrated indecentbehaviour or has repeatedly violated or ignored the rules of hisemployment; or

(c) where the Employee displays such conduct as to make it obvi-ous that the relationship between the Employee and theEmployer cannot reasonably be expected to continue.

7.5. The Employee may terminate this Agreement after the comple-tion of the Probation Period by giving to the Employer three months’written notice.

App. 11ATHE COMMERCIAL LAWS OF CYPRUS


7.6. After notice of termination has been given by either party:(a) the Employer may in its absolute discretion pay the Em-

ployee in lieu of all or any part of any notice; or(b) provided the Employee continues to be paid and to enjoy

his/her full contractual benefits under the terms of this Agree-ment, the Employer may in its absolute discretion for all orpart of the notice period:

(i) exclude the Employee from the premises of the Employer andrequire that he/she carries out duties other than those specified inhis/her Job Description; or

(ii) require that he/she carries out no duties at all until thetermination of his/her employment.

8. CONFIDENTIALITY8.1. The Employee is aware that during his or her employment he/

she may receive confidential information concerning the Employerand/or the Employer’s business. The Employee shall not during theterm of his or her employment, disclose or allow the disclosure of anyconfidential information (except in the proper course of his or heremployment).

8.2. After termination of this Agreement for any reason, the Em-ployee shall not disclose or use any of the Employer’s trade secrets orany other information which is of a sufficiently high degree ofconfidentiality to amount to a trade secret for a period of 2 years fromthe date of termination. The Employer shall be entitled to apply for aninjunction to prevent such disclosure or use and to seek any other rem-edy including without limitation the recovery of damages in the case ofsuch disclosure or use.

9. NOTICES

All communications including notices required to be given under thisAgreement shall be in writing and shall be sent either by personal serviceor first class post to the parties’ respective addresses.

10. SEVERABILITY

If at any time any provision of this Agreement shall be found by any courtor administrative body of competent jurisdiction to be invalid, illegal orunenforceable, such invalidity, illegality or unenforceability shall not affectthe other provisions of this Agreement which shall remain in full force andeffect.

11. VISA AND RESIDENCY

This appointment is made subject to the Employee qualifying for therequisite entry visas and residency in the country in which the Employeeis intended to work pursuant hereto.

12. EMPLOYMENT AND EMPLOYER’S POLICY

This Agreement and all other legitimate policy related documents and/or

App. 11A DIGEST OF COMMERCIAL LAWS OF THE WORLD

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declarations and instructions which may be issued by the Employer fromtime to time regarding safety at work, ethics, dress-code and any otherlegitimate matter with relation to the Employer’s business and theworkplace in general, constitute the terms and conditions of the Employ-ee’s employment and any waiver or modification must be in writing andsigned by the parties to this Agreement

13. MONITORING OF COMMUNICATIONS

It may be necessary for the Employer to protect its interests by monitor-ing communications on private networks (office telephone networks,internet or email, etc.) on the premises of the Employer. The Employeeacknowledges that such monitoring may take place and hereby expresslyconsents to such monitoring.

14. GOVERNING LAW

This Agreement shall be construed in accordance with the laws of Cyprusand shall be subject to the exclusive jurisdiction of the Cyprus courts.

IN WITNESS WHEREOF the parties hereto have signed this Agree-ment the day and year first above written.

SIGNED –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Signed by or onbehalf of theEmployer

in the presence of(witness)

. . . . . . . . . . . . . . . . . . . . . .

Name –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Address ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Dated: ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Occupation –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

SIGNED –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Signed by theEmployee

in the presence of(witness)

Name –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Address ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Dated: ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Occupation –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

App. 11ATHE COMMERCIAL LAWS OF CYPRUS


APPENDIX 11B

Instrument of Transfer

INSTRUMENT OF TRANSFER

We [Name of transferor] Limited of [Address of transferor] (hereinaftercalled the “transferor”) for good and valuable consideration paid to us by[Name of transferee] (hereinafter called the “transferee”) do herebytransfer to the said transferee the shares shown in the schedule belowheld by us in the undertaking called [Name of Company] LIMITED (the“Company”).

To hold unto the said transferee, transferee’s executors, administratorsand assigns subject to the several conditions on which we held the sameat the time of the execution thereof. And the said transferee does herebyagree to take the said shares subject to the conditions aforesaid.

This Instrument of Transfer may be signed in one or more likecounterparts and by one or more of parties hereto and a copy (includinga facsimile or electronic version) of such signed counterpart shall bedeemed to be an original, and such counterparts together shall constituteone and the same Instrument of Transfer and notwithstanding the date ofexecution shall be deemed to bear the date of [date of transfer].

Schedule

No. of shares: [number]—[number in words]

Serial Nos. of shares From ——————————— to ———————————

Nominal value of each share ———————————

Signature of the transferor Signature of the transferee

——————————— ———————————

Witness to the signature oftransferor

Witness to the signature oftransferee

——————————— ———————————Date:

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APPENDIX 11C

Power of Attorney

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS THAT, WE, [Name of Ap-pointer] (“Company”) of [Address of Appointer], DO HEREBY NOMINATE,CONSTITUTE AND APPOINT [Name of agent], of [Address of agent],bearer of the [country of issue] passport no. [number of passport], as ourtrue and lawful Attorney in [Country of appointment], to act for us, in ourname and on our behalf:1.1. To consider, negotiate, approve, sign, execute, deliver and/or issue

all agreements, documents, certificates and instruments (all whetheras a deed or not and under seal if necessary) which the Attorney inhis absolute discretion considers desirable in connection with thesale of the Company’s entire shareholding participation in [Name ofinvestment] Limited, being [number of shares] ordinary shares of[nominal value of each share] each, numbered ———————————to ——————————— inclusive (“Transaction”) including withoutlimitation all documentation necessary to effect the Transaction,subject to such amendments or variations as the Attorney mayagree, provided that such amendments or variations are of a minornature and are not material to the Transaction.

1.2. To take any steps or do anything which the Attorney in his absolutediscretion considers desirable in connection with the implementationof the Transaction or the implementation and/or execution of thedocumentation necessary to effect the same including, inter alia,any share purchase agreements or instruments of transfer.

The Attorney is not authorised to delegate the powers granted to himunder this Power of Attorney.

This Power of Attorney is issued and shall remain in full legal force andeffect for 1 (one) year from the date of the execution thereof, upon thecondition however, that this Power of Attorney may be revoked at anytime by a single written notification to the Attorney.

This Power of Attorney shall be construed and governed in accordancewith the laws of Cyprus.

IN WITNESS WHEREOF, this Power of Attorney has been duly executedthis [date] day of [month], [year].

The common seal of )


[Name of Appointer] LIMITED )is hereunto )affixed in the presence of )

———————————

Director

———————————[Signature of Director/Secretary]

App. 11C DIGEST OF COMMERCIAL LAWS OF THE WORLD

11-64

APPENDIX 11D

Sale Agreement

SALE AGREEMENT

AN AGREEMENT made this [date] 20—, in [name of place], Cyprus.

BETWEEN [vendor’s name and address], hereinafter called “the Vendor”,of the one part and [purchaser’s name and address], hereinafter called“the Purchaser” of the other part.

WHEREAS:(a) The Vendor is the person entitled to be registered as the owner of a

house situated within [property location], Cyprus and covered byRegistration No. [number of registration], Plot No. [number of plot] ofSheet/Plan [number of sheet/plan], hereinafter called “the said house”.

(b) The Purchaser wishes to purchase from the Vendor and the Vendorhas agreed to sell to the Purchaser the said house, on the terms andconditions herein contained.

NOW THEREFORE THIS AGREEMENT witnesses the following:1. The recitals of fact and representations, set forth in the preamble

above, are true and they are incorporated into the body of this agree-ment by reference.

2. The Vendor hereby sells to the Purchaser and the Purchaserpurchases from the Vendor the said house.

3. The consideration for the said sale is hereby agreed at [price innumeral]-([price in words]) payable by the Purchaser to the Vendor asfollows:

(a) [Deposit amount]-([deposit amount in words]) upon the signing ofthis agreement, as deposit, receipt whereof is hereby acknowledgedby the Vendor,

(b) [Next payment amount] – ([amount in words]) on or before [datedue], and

(c) The balance of [balance amount]—([balance amount in words])upon the transfer and registration of the said house into the nameof the Purchaser, at the time and in the manner provided herein-below.

Any installment in arrear shall bear interest at the rate of 8% per annum,from the date of maturity to the date of settlement.4. The said house is sold in its present condition having been inspected

and approved by the Purchaser and the Vendor shall not be in anyway responsible or liable for any hidden or apparent defects referringto the construction, condition or functioning thereof.


5. The Vendor shall deliver to the Purchaser free possession of the saidhouse upon the payment by the Purchaser of the sum of [Next pay-ment amount]—([amount in words]), as above. As from the date ofsuch delivery the Purchaser shall be liable to pay all immovable prop-erty taxes or other rates or levies related to the occupation of the saidproperty and if such taxes, rates or levies shall be paid by the Vendorthey shall be refunded to him by the Purchaser on demand. It isunderstood that all such taxes, rates or levies accrued before the dateof delivery of possession will be borne by the Vendor.

6. The Vendor shall be under an obligation to transfer and register thesaid house, free of any mortgages, liens, encumbrances or any othercharges whatsoever, into the name of the Purchaser or in the name ofany party nominated in writing by the Purchaser, subject to the follow-ing conditions:

(a) The purchase price, plus interest, if any, as well as all expensesand all taxes, rates charges or other sums due and payable by thePurchaser to the Vendor in relation to the said property shall havebeen paid by the Purchaser in full, and

(b)

(I) the Purchaser, being an alien, shall have obtained from theCouncil of Ministers the permit to acquire the said property asprovided by the Immovable Property Acquisition (Aliens) Law,Cap.109, as amended and the Vendor shall be under the obligationto supply all information and particulars within his possession orknowledge and in every respect to assist the Purchaser to securethe aforesaid permit.

(II) in the event that the Purchaser shall fail to acquire therequisite Council of Ministers permit for the said property he shall beentitled to remain in possession of the said house for as long as isreasonable to dispose of the said property and in which case theVendor hereby irrevocably undertakes to act upon the instructions ofthe Purchaser to cancel the present agreement and to enter into anew sales Agreement with such person or persons as will benominated to the Vendor for such price in cash as the Purchasershall state, provided that the final resultant financial position of theVendor shall not be adversely affected by any such new agreementand in consideration of the cancellation of this Agreement thePurchaser agrees to keep harmless the Vendor and to indemnify theVendor accordingly for any loss or liability that he may incur. Allother terms and conditions of the New Sales Agreement shall remainthe same as in the present Agreement. Upon compliance with thePurchaser’s instruction as above the Vendor shall be dischargedfrom the obligation under the present agreement, but until suchcompliance the Vendor will be bound by the provisions of thisAgreement.

(III) For the removal of any doubt it is clarified that the Vendorshall bear no profit or loss from this transaction and will be

App. 11D DIGEST OF COMMERCIAL LAWS OF THE WORLD

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compensated by the Purchaser for any loss, liability and/or expensesarising out of the Vendor so acting upon the Purchaser’s instructionsincluding, but not limited to any Income Tax payable by the Vendoror any difference in price between this and any future sale. It is alsoagreed that any burden or loss or liability which may be incurred dueto the future sale will be arranged and/or settled between thecontracting parties simultaneously with the signing of the new SalesAgreement.

(c) The transfer fees for the transfer and registration of the said prop-erty into the name of the Purchaser or into the name of any otherperson nominated by him as above, shall be borne by thePurchaser, who will also pay the stamp duty on this agreement.

7. Any party in breach of this agreement shall be liable to the payment tothe other of damages in respect thereof, and if the party in breachshall be the Vendor he shall also be liable to refund to the Purchaserall monies paid by him hereunder, with interest thereon at the rate of8% per annum, from the date of payment to the date of settlement.

8. WITHOUT prejudice to the above provision or any provision in thisagreement referring to damages, this agreement shall be specificallyenforceable, the right of the Purchaser to deposit copy of this agree-ment with the District Lands Office of [Name of district] for specificperformance purposes, being hereby absolutely reserved.

9. (a) The present agreement binds the parties, their heirs, executors,administrators and assignees.

(b) Any notice to be served by either party pursuant to this agree-ment shall be by service by registered post to the parties= last knownaddress.

(c) Nothing contained in this agreement shall restrict any right of thePurchaser accruing from the Law of Contracts applicable in Cyprus.

(d) The present agreement has been made in duplicate each partytaking one copy.

IN WITNESS whereof the parties hereto have hereunto set their respec-tive signatures, the day and year first above written.

THE VENDOR THE PURCHASER

——————————— ———————————[Name of vendor] [Name of purchaser]

WITNESSES:

1. ———————————

2. ———————————

App. 11DTHE COMMERCIAL LAWS OF CYPRUS


APPENDIX 11E

Sample Minutes and Resolution

[Name of Company] LIMITEDRegistration No. ———————————

(the “Company”)

MINUTES OF THE EXTRAORDINARY GENERAL MEETING OF THECOMPANY HELD ON [date of meeting] CONVENED IN ACCOR-DANCE WITH THE ARTICLES OF ASSOCIATION OF THE COMPANY.

PURPOSE OF RESOLUTION:

Following the execution of the Credit Facility between [name of party]and [name of bank] Bank (the “Bank”) dated [date of execution], thepurpose of these resolutions are to consider the execution of a securityarrangement in the form of a corporate guarantee to the Bank for thebenefit of [name of beneficiary] to the maximum amount of [amount ofguarantee].

After careful and proper consideration of the issues referred to hereun-der, having had an opportunity to review the text of the corporateguarantee (the “Guarantee”) in question and after careful consideration ofthe recommendations of the Board of Directors of the Company, themembers of the Company have UNANIMOUSLY RESOLVED as follows:

ORDINARY RESOLUTION1. THAT the terms and conditions of the Guarantee are beneficial and in

the best interests of the Company and should be and are hereby ap-proved and accepted.

2. THAT the Board of Directors of the Company be and are hereby au-thorized and directed to do all such acts and things as shall be neces-sary or desirable to implement, execute and/or register the resolutionsherein.

It is hereby certified that theabove is a true copy of theMinutes of the ExtraordinaryGeneral Meeting of theCompany held on —————and of the resolutionsresolved by the Members ofthe Company.

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————————————————Director

————————————————Company Secretary

App. 11ETHE COMMERCIAL LAWS OF CYPRUS


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